OpenAI may have broken consumer protection laws.

FTC Probe

The Federal Trade Commission has started an extensive investigation into ChatGPT maker OpenAI to figure out whether it has violated consumer protection laws by undermining its users' reputations.

The regulator fired off a 20-page demand, The Washington Post reports, requiring OpenAI to provide detailed descriptions of each time somebody had filed a complaint over its products making "false, misleading, disparaging or harmful" statements about users.

The language model's well-documented habit of spouting off falsehoods, the FTC alleges, may have unfairly caused "reputational harm" to consumers, thereby running afoul of consumer protection laws.

It's a notable escalation, representing one of the biggest regulatory challenges to the Sam Altman-led company to date — and one that has watchdogs on alert.

"Every person deserves to know their information is safe and that AI products won't harm or mislead them," tweeted digital advocacy group the Center for AI and Digital Policy.

Next Frontier

Meanwhile, lawmakers are racing to come up with meaningful rules surrounding the use of AI-powered tools like ChatGPT.

The FTC had already issued several warnings, with Charlotte Burrows, the chair of the Equal Employment Opportunity Commission calling the rapid rise of AI tech a "new civil rights frontier" earlier this year.

Notably, the FTC is also asking OpenAI to provide any records related to a bug — which it acknowledged back in March — that allowed some users to see payment-related information, the WaPo reports.

The FTC clearly has a watchful eye on the burgeoning AI industry, sending plenty of signals that AI regulations are coming. The agency also issued warnings about AI-enhanced phone scams and misleading, fake product reviews.

Current FTC chair Lina Khan has already faced plenty of GOP opposition over sprawling antitrust plans and is set to face a likely fiery hearing before the House Judiciary Committee at press time.

In other words, whether the agency's latest investigation will end up leading to the establishment of rules OpenAI will have to abide by remains to be seen.

More on FTC: Government Warns Tech Companies to "Keep Your AI Claims in Check"

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