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In essence, companies misrepresent their use of AI to stay aligned with market trends, attract funding, or improve their brand image, even if there’s little to no meaningful AI integration. For example, a company claiming to be "AI-powered" but which does not incorporate genuine AI technologies in its offerings is engaging in AI washing.
Regulatory Crackdowns
The gravity of AI washing has prompted regulatory bodies like the FTC and SEC to take action. In 2024, these agencies penalized two firms, Adelphia and Global Predictions, with fines totaling $400,000 for misleading claims about AI-driven services. Global Predictions, for instance, falsely advertised itself as the "first regulated AI financial advisor," which investigations proved to be untrue.