🤖 Legal Bomb Dropped on Startups for Deceptive AI Claims

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In today’s AI Report:

• 💣Legal Bomb Dropped on Startups for Deceptive AI Claims

• 🎬Stability AI Embraces Hollywood’s AI Vision?

• 💊Should We Label AI Systems Like Prescription Drugs?

• 🛠Trending Tools

• 💰Funding Frontlines

• 💼Who’s Hiring?

Read Time: 3 minutes

🗞RECENT NEWS

AI REGULATION

💣Legal Bomb Dropped on Startups for Deceptive AI Claims

The Federal Trade Commission (FTC) is taking action against five startups for misleading consumers by making deceptive AI claims.

Key Details:

• The FTC’s new enforcement initiative, “Operation AI Comply,” protects consumers from unfair business practices related to AI-powered services.

• Today, “Operation AI Comply” announced it’s taking action against five startups:

  1. DoNotPay: Claimed to provide AI-powered legal services.

  2. Ascend Ecom: Offered “cutting edge” AI-powered tools to help consumers earn thousands of dollars through online storefronts.

  3. Ecommerce Empire Builders (EEB): Promised to deliver massive revenue streams from AI-powered online stores.

  4. Rytr: Marketed an AI writing assistant that generates false consumer reviews.

  5. FBA Machine: Guaranteed passive income through AI-enhanced online storefronts.

Why It’s Important:

• Among the startups targeted is DoNotPay, which claims to be the “world’s first robot lawyer” powered by OpenAI’s GPT-4 to file “one-click lawsuits.”

• The FTC’s complaint alleges the startup misled consumers by promising legal services that replace traditional lawyers.

STABILITY AI

🎬Stability AI Embraces Hollywood’s AI Vision?

Stability AI, a once-high-flying startup focused on developing and distributing open-source AI models, recently added a new member to the Board of Directors (BofD) as part of the startup’s restructuring effort.

Key Details:

• Stability AI Founder and CEO Emad Mostaque resigned from his role and position on the BofD to pursue decentralized AI.

• His decision followed a string of high-level research member departures and investor pressure from Coatue Management and Lightspeed Venture Partners.

• Mostaque posted on X: “We’re not going to beat decentralized AI with more centralized AI.” He also noted Stability AI had a “strange focus on revenue.”

• In the First Quarter (Q1) of 2024, Stability AI generated less than $5 million in revenue and lost more than $30 million. It also owes nearly $100 million to cloud computing providers.

• Former Weta Digital CEO Prem Akkaraju is stepping in as Stability AI’s Managing Director.

• In his first move, Akkaraju added Canadian filmmaker James Cameron to the BofD. Cameron is known for his expansive vision and innovative special-effects films, including the Avatar Films, Terminator Series, and Titanic.

Why It’s Important:

• Stability AI is shifting toward creative AI applications in filmmaking to assist directors, actors, and actresses.

• This decision comes as Hollywood grapples with AI’s involvement in the creative process and is concerned over proper consent and compensation for creatives.

🩺 PULSE CHECK

AI ETHICS

💊Should We Label AI Systems Like Prescription Drugs?

AI systems are increasingly being deployed in safety-critical healthcare situations. However, these AI systems sometimes hallucinate false information, which could seriously affect patients and clinicians.

MIT Associate Professor in Electrical Engineering and Computer Science (EECS) Marzyeh Ghassemi argues that to mitigate these potential harms, AI systems should be accompanied by responsible-use labels, similar to the U.S. Food and Drug Administration’s (FDA’s) required labels on prescription drugs.

Responsible-use labels “can help to ensure patients are aware of potential side effects, warnings, precautions, or adverse reactions,” explained Ghassemi.

AI systems bypass various approval stages and long-term regulatory monitoring processes in the drug development phase. Generative AI (GenAI) has demonstrated that it’s not guaranteed to be appropriate, robust, or unbiased.

🛠TRENDING TOOLS

🛒MagicPatterns prototypes your product ideas.

🍿JimengAI turns inspiration into movies instantly.

📸ClarityAI upscales, enhances, and adds details to your images.

🎸OpenMusic generates high-quality music from text descriptions.

🧙‍♀️Pocus generates custom sales strategies for your target accounts in seconds.

🔮Browse our always Up-To-Date AI Tools Database.

💰FUNDING FRONTLINES

• QureAI raises a $65M Series D to expand AI healthcare solutions globally.

• ConvergeAI closes a $12M Pre-Seed Round to give AI agents long-term memory.

• NurixAI secures a $27.5M Seed Round to deploy tailored AI agents for enterprise services.

💼WHO’S HIRING?

• Rippling (New York City, NY): Software Engineering Intern, Summer 2025

• WisprAI Flow (San Francisco, CA): Software Engineering Intern, Summer 2025

• Salesforce (San Francisco, CA): Business Insights Analyst Intern, Summer 2025

• OpenAI (San Francisco, CA): Software Engineering Intern/Co-Op, Applied Emerging Talent

• NVIDIA (Santa Clara, CA): Compiler Engineer, Low-Level Virtual Machine {LLVM}, New College Grad 2024

🤖PROMPT OF THE DAY

MARKETING

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📒FINAL NOTE

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