FTC investigating ChatGPT over potential consumer harm

The Federal Trade Commission has opened an investigation into the popular chatbot ChatGPT. The agency says it’s looking into whether the AI tool has harmed people by generating incorrect information about them, according to a letter sent to its parent company OpenAI.

The FTC’s investigation, which was first reported by the Washington Post, is also looking into OpenAI’s privacy and data security practices. A person familiar with the matter confirmed the investigation. The FTC declined to comment and OpenAI didn’t respond to request for comment.

The 20-page letter is requesting that OpenAI turn over company records and data on several issues, including company policies and procedures, financial earnings, and details of the Large Language Models it uses to train its chatbot.

The agency wrote that it’s looking into whether the company has “engaged in unfair or deceptive practices relating to risks of harm to consumers, including reputational harm.”

The FTC’s investigation is breaking new ground with government regulatory action involving the AI industry, which has exploded in popularity over the last year. Sam Altman, OpenAI’s CEO, has regularly warned about the risks of AI and advised that the new technology needs to be regulated. He’s testified before Congress and met with President Joe Biden and Vice President Kamala Harris.

Lawmakers from New York to California have been hashing out how to regulate the burgeoning technology. Congressman Ted Lieu, D-CA, has proposed putting together an AI commission to study the impact of the technology. Senate Majority Leader Charles Schumer, D-N.Y., is working on possible AI legislation. But experts say that regulation could be months, even years off.

“OpenAI, Microsoft, and other companies selling generative AI systems have said they welcome regulation,” said Paul Barrett, deputy director of the NYU Stern Center for Business and Human Rights. “The FTC has responded appropriately–by seeking extensive disclosure of how industry leader OpenAI assembles and refines its artificial intelligence models.”

Under the helm of Commissioner Lina Khan, the FTC has gone after major tech companies such as Meta, Amazon and Microsoft. The watchdog agency has also repeatedly said that AI falls under the purview of consumer protection laws.

“There is no AI exemption to the laws on the books,” Khan said in an April news conference.

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