The Federal Trade Commission (FTC) announced Tuesday (March 24) that it has reached a settlement with Air AI under which the company and its owners are prohibited from marketing business opportunities.
The settlement follows the FTC’s August complaint alleging that Air AI, five affiliated companies, and owners Caleb Maddix, Ryan O’Donnell, and Thomas Lancer made false claims about business growth, earning potential, and money-back guarantees while selling artificial intelligence (AI)-related tools, the agency announced in a press release Tuesday (March 24).
The proposed order against Air AI also includes an $18 million money judgment, most of which will be withheld due to the company and the carrier’s inability to pay the full amount, according to the release. According to the release, carriers must pay $50,000 to the FTC for consumer relief.
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Air AI did not immediately respond to PYMNTS’ request for comment. The company’s website was down at the time of publication.
The complaint alleges that the company and its owners made false claims and misrepresentations about the potential for significant profits for those who purchased their services, money-back and repurchase guarantees, and the performance of their services, according to an FTC press release. It also alleged that it failed to provide consumers with required disclosure documents.
The regulator’s complaint alleges that these actions violated the Telemarketing Sales Rule and the Business Opportunity Rule, according to the release.
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The proposed order is subject to court approval, according to the release.
When it announced charges against Air AI in August, the FTC alleged that the company promoted a conversational AI product that could replace human customer service representatives and combine with other services to make millions of dollars for business owners. Business owners who participated in Air AI also claim to have lost as much as $250,000.
“Companies that sell AI-related tools with false promises of unrealistic investment returns or money-back guarantees harm hard-working small business owners and undermine the adoption of AI by legitimate businesses,” FTC Consumer Protection Director Christopher Mufarige said in an August press release. “The FTC is focused on ensuring that the promises of new technologies are not exploited as a means to mislead consumers.”
