AI tools could make fraud and scams more effective, Federal Trade Commission Chair Lina Khan told House representatives. At a hearing on consumer protection, Khan and fellow commissioners described the risks of emerging technology and how the agency is preparing to respond.
AI brings consumer risks alongside opportunities
Asked how the FTC was addressing unfair practices tied to technological advances, Khan said AI creates both opportunities and risks. She warned that tools such as ChatGPT could be used to “turbocharge” fraud and scams.
Khan said the agency had been putting market participants on notice: designing AI tools to deceive people could expose those participants to FTC action. She also called the possibility of AI-enabled fraud a “serious concern.”
The warning centers on the way technology may be used to mislead consumers. The commissioners’ remarks did not describe a particular AI scam; they focused on the broader risk that tools could help make deceptive practices more powerful.
Technologists are being brought into agency work
Khan said FTC technologists were being embedded across the agency, including in both consumer protection and competition work. Their role is to help identify AI-related issues and ensure they are handled appropriately.
The FTC also pointed to its Office of Technology, launched in February to support law enforcement and policy work with in-house technical expertise. Its areas of focus include security and privacy, digital markets, augmented and virtual reality, the gig work economy, ad tracking technologies, and automated decision-making, which could include AI.
The agency said the office builds on efforts to expand its technical expertise and brings it in line with other leading antitrust and consumer protection enforcers around the world. Having technical specialists inside the agency is intended to help it keep pace with changes across these fields.
Slaughter urged the agency to adapt
Commissioner Rebecca Slaughter put Khan’s warning in the context of the FTC’s experience with earlier technological changes. She said the agency’s obligation is to apply its existing tools to new technologies, develop the expertise to do so effectively, and continue protecting people.
Slaughter acknowledged the attention around AI and described it as revolutionary in some ways. But she urged the agency not to be scared off by the fact that it is new, and to dig into the work of consumer protection.
The hearing covered a wider consumer protection agenda
Khan, Slaughter, and Commissioner Alvaro Bedoya delivered testimony before the House Energy and Commerce Subcommittee on Innovation, Data, and Commerce. AI was one subject among many in a hearing focused on the FTC’s work against fraud and deceptive practices.
The agency’s written testimony also addressed spam phone calls, deceptive claims by online home buyer Opendoor about potential sales prices, claims made by members of the crypto community, and private health data collected by websites and apps. It covered the FTC’s handling of COPPA violations by Fortnite maker Epic Games and orders to online learning platform Chegg over its failure to protect personal data.
Other topics included junk fees, the difficulty consumers face when canceling subscriptions, and deceptive practices in the gig economy. Together, these issues show the range of consumer concerns the FTC was discussing as it considered how to respond to technological change.
The commissioners’ message on AI combined a warning about possible misuse with an emphasis on agency readiness. The FTC says technical expertise will help it identify risks, while Slaughter stressed the importance of applying the agency’s tools as technology changes.