FTC Compliance Alert for Deploying AI: Upholding Privacy and Confidentiality, Part 1

Mar 05, 2024By DataCurve

FTC Compliance Alert to Companies Deploying AI: Uphold Your Privacy and Confidentiality Commitments

Data remains a vital ingredient fueling AI development and deployment. However, the US Federal Trade Commission (FTC) recently announced that companies incorporating AI that fail to abide by their privacy commitments to their users and customers may be liable under the laws enforced by the FTC.  This includes promises made by companies that they won’t use customer data for secret or alternative purposes, such as to train or update their models, directly or indirectly.

While there is tremendous business incentive to constantly ingest additional data, the FTC’s position is that this incentive cannot override a company’s obligations to protect users’ data, undermine user privacy or misappropriate data. Any breach of privacy commitments, whether through misuse of consumer data or surreptitious alterations to terms of service can incur legal repercussions under FTC enforcement.

The FTC has previously required businesses that unlawfully obtain consumer data to delete any products—including any models and algorithms developed using that unlawfully obtained data. Under this announcement, the FTC is reinforcing that it will continue to ensure that firms are not reaping business benefits from violating the law.

In essence, there exists no exemption for AI firms from existing legal frameworks. The FTC remains clear against both explicit misrepresentations and material omissions regarding data usage. These practices not only violate consumer protection laws but also pose threats to fair competition by misleading customers and potentially granting dishonest businesses unfair advantages.

How Can AI and Model-as-a-Service Companies Remain Compliant?

Model-as-a-service companies must uphold their commitments to transparency and user consent. The AI Brewery’s proprietary MiddleWare platform embraces the transformative power of Web3 combined with AI to help assure data integrity and privacy compliance. The AI Brewery’s Logicware harnesses the transformative power of Web3 to fortify your AI dataset security and integrity. As a result, organizations can confidently leverage high-quality, error-resilient datasets for AI solutions and deployments, including:

Data Privacy and Security: Prioritize data privacy and security of datasets and models by leveraging smart contracts governing data access and usage permissions, ensuring data privacy while enabling collaboration and data-driven advancements.

Collaborative Model Training: Organizations and individuals can collectively train models using distributed datasets without the need for data centralization. This collaborative approach allows for the development of more robust and accurate models while maintaining data privacy and ownership.

Digital Incetives:  Introduce tokenized incentives for data contributors in the AI ecosystem. Incentivize participation and create a sustainable ecosystem where data contributors are fairly compensated.

Transparent and Auditable Model Validation: Enable transparent and auditable model validation and evaluation. Independently assess the data models for fairness, bias, and performance. Foster trust in AI technologies and promote responsible and accountable use of datasets and models, through the use of smart contracts and provenance verification.

Marketplaces for AI Datasets and Models: The Brewery’s technology enables the creation of permission-based decentralized data marketplaces, where organizations can securely contribute, share, and monetize AI models and datasets. 

To learn more about how The Brewery can help your organization drive more accurate and insightful AI-driven applications, connect with us.

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