The Federal Trade Commission (FTC) has launched a sweeping investigation into OpenAI, the creator of the popular ChatGPT generative AI bot, to determine whether the company has violated consumer protection laws.
The FTC’s investigation into OpenAI centers on potential consumer harm and data security concerns.
In a 20-page letter to OpenAI this week, the FTC demanded records of how the company manages risks associated with its AI models. The FTC is also looking into whether OpenAI has engaged in practices that have resulted in “reputational harm” to users and is requesting details of all the complaints OpenAI has received about the chatbot making “false, misleading, disparaging or harmful” comments about individuals.
This is the first major regulatory challenge OpenAI has faced in the US. If found guilty, OpenAI could be fined and compelled to follow strict data handling rules.
Consumer Protection Laws Apply to AI: FTC
The FTC’s letter follows repeated warnings to businesses not to overstate the capabilities of AI or to misuse the technology in discriminatory ways. The FTC has also signaled increased regulatory oversight of AI as lawmakers prepare to draft new legislation for the rapidly evolving sector.
US efforts at regulating AI have largely lagged behind other countries. European Union lawmakers, for example, are barreling toward finalizing landmark legislation that bans the use of AI for predictive policing and applies restrictions to high-risk usage scenarios.
The FTC’s letter asks OpenAI to provide detailed information on how it obtains the data it uses to train its large language models, how it tests, tweaks, and manipulates its algorithms to produce different responses or to address risks, and how it prevents its chatbot from making false claims. It also asks the company to explain any steps it has taken to address cases of “hallucination.”
After unveiling ChatGPT-4 on March 14, OpenAI said it “has similar limitations as earlier GPT models,” adding that “it is still not fully reliable (it ‘hallucinates’ facts and makes reasoning errors).”
OpenAI CEO Says FTC Probe ‘Does Not Help Build Trust’
The FTC is also investigating a security incident OpenAI disclosed in March, where a system bug exposed some users’ payment-related information and chat history.
In response to the news, OpenAI CEO Sam Altman said it’s “disappointing to see the FTC’s request start with a leak and does not help build trust.”
In a series of tweets, Altman said, “we built GPT-4 on top of years of safety research and spent 6+ months after we finished initial training making it safer and more aligned before releasing it. we protect user privacy and design our systems to learn about the world, not private individuals.”
He reiterated OpenAI’s commitment to user safety, saying, “we are confident we follow the law.”
The FTC’s investigation reflects the increased scrutiny AI companies face regarding consumer protection and data privacy. The outcome of the investigation will likely have significant implications for OpenAI and could shape the future regulatory landscape for AI companies in the US.
We strongly advise against sharing personally identifiable information with ChatGPT or any other chatbot. You can also opt out of data collection in the ChatGPT app settings by disabling “Chat history & training” under Data Controls.
We recommend using a VPN when interacting with ChatGPT to protect your privacy. A VPN can also help bypass restrictions if ChatGPT is blocked where you live.
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