Yesterday, the FTC filed a lawsuit against Air AI Technologies (also known as Air AI, Air.AI, and Scale 13), five affiliated companies, and three individuals—Caleb Matthew Maddix, Ryan Paul O'Donnell, and Thomas Matthew Lancer—alleging deceptive business practices. According to the complaint, Air AI promoted "AI-driven" business opportunities with promises that small businesses could earn as much as $250,000. The FTC also alleges that the defendants touted "guaranteed" refunds, which were often denied when customers attempted to collect.
This case is part of a broader FTC effort targeting misleading earnings and refund claims, particularly where artificial intelligence is positioned as a shortcut to business success. Earlier this year, the FTC shut down several entities running similar operations that promised outsized income potential through automated storefronts and other "plug-and-play" ventures. We wrote about that enforcement sweep here. The action against Air AI also follows on the heels of a major settlement involving health insurance marketers Assurance IQ and MediaAlpha, where the FTC secured $145 million in refunds over allegations of misleading advertising. We covered that case here.
Takeaways:
- Earnings representations must reflect typical consumer results, not best-case scenarios.
- Refund guarantees must be honored as advertised.
- Claims about AI capabilities are receiving heightened scrutiny, and marketers should ensure they can substantiate the technology's actual performance.
As the FTC continues to bring actions across industries—from health insurance marketing to AI-driven business ventures—the message is consistent: longstanding advertising rules apply regardless of the technology or platform involved. Companies promoting new tools and services, particularly those involving AI, should expect regulators to scrutinize both their earnings claims and the promises they make to consumers.
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This post first appeared in Frankfurt Kurnit's Focus on the Data blog (www.focusonthedata.com). It provides general coverage of its subject area. We provide it with the understanding that Frankfurt Kurnit Klein & Selz is not engaged herein in rendering legal advice, and shall not be liable for any damages resulting from any error, inaccuracy, or omission. Our attorneys practice law only in jurisdictions in which they are properly authorized to do so. We do not seek to represent clients in other jurisdictions.
Originally published by the New York Legal Ethics Reporter
This alert provides general coverage of its subject area. We provide it with the understanding that Frankfurt Kurnit Klein & Selz is not engaged herein in rendering legal advice, and shall not be liable for any damages resulting from any error, inaccuracy, or omission. Our attorneys practice law only in jurisdictions in which they are properly authorized to do so. We do not seek to represent clients in other jurisdictions.
This alert provides general coverage of its subject area. We provide it with the understanding that Frankfurt Kurnit Klein & Selz is not engaged herein in rendering legal advice, and shall not be liable for any damages resulting from any error, inaccuracy, or omission. Our attorneys practice law only in jurisdictions in which they are properly authorized to do so. We do not seek to represent clients in other jurisdictions.
