Like you, perhaps, I have trouble trusting what artificial intelligence says and does. But even if AI hallucinations are “solvable” and the tech doesn’t sway elections, shred privacy, or destroy humankind, there’s yet another trust worry.
People and companies lie about AI.
The Securities and Exchange Commission is sounding the alarm. In a recent speech, SEC chair Gary Gensler warned that the current hype around AI might encourage businesses to engage in “AI-washing”—making misleading or false claims about their use of the technology.
Meanwhile, the Federal Trade Commission has told companies that advertise AI products and services to keep their claims in check. And the SEC and the Financial Industry Regulatory Authority (FINRA) have warned of investment scams involving the purported use of AI.
So, what exactly is AI-washing?
“It’s very similar to greenwashing,” says Maya Dillon, VP and head of AI at Cambridge Consultants. It could mean exaggerating the capabilities of an AI offering, and/or downplaying its limitations, Dillon explains. Or calling something AI when it isn’t. Or using AI buzzwords for marketing purposes, without any real substance to back them up.
How concerned should we be?
“If the SEC and FTC and others are weighing in, there’s clearly a bad problem there,” says Steve Mills, chief AI ethics officer with Boston Consulting Group.
Regulators vowing to hold companies accountable for AI-washing is one thing. But as Dillon points out, existing legislation only covers the data used to produce AI models, not the models themselves.
For now, that leaves providers and the industry to self-regulate via AI assurance, which Cambridge is helping develop. Assurance consists of processes, frameworks, and tools that ensure AI systems are human-centric, reliable, safe, technically robust, secure, and ethical, Dillon says. The aim: transparency and accountability so AI can be trusted. “That process in itself forces you to prove that your AI solution actually works and does what it says on the tin.”
At the same time, AI providers should let an objective third party assess those efforts.
Those shopping for AI products and services must do their homework too.
Expect transparency, Mills advises. “If you’re looking at four solutions, and three of them are being super transparent and one isn’t, it leads you to start asking a lot of questions.”
On that note, Dillon suggests going straight for the technology. You’re paying for it, so don’t be shy. “Where did the data come from that created this algorithm?” is one key question, Dillon says. “How was this algorithm developed? How is it being deployed? And what are the results that come back from it, and how is that information used? Sometimes it’s those simple questions that will easily enable you to understand whether or not what you’re looking at is AI.”
Don’t feel confident grilling the vendor? Get help. Some venture capital firms are going that route, Dillon notes, by having independent organizations do AI technical due diligence for them.
Mills also recommends seeing if the company has legit AI experts on staff. “Are they making all these claims, but then they don’t seem to have the technical expertise to back up those claims?”
Bottom line: If that AI solution sounds too good to be true, it probably is. The sales pitch shouldn’t leave you feeling like you need a wash.
Nick Rockel
nick.rockel@consultant.fortune.com
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Photo Finnish
Talk about a victory lap. For the seventh straight year, Finland claims the title of world’s happiest country. What’s the Nordic nation’s secret? Citizens’ trust in institutions, access to nature, and low stress, according to Finland’s ambassador to the U.S. Speaking of America, it fell out of the World Happiness Report’s top 20 for the first time, landing at No. 23. Taking second and third place: Denmark and Iceland.
Trade marks
For scammers pretending to work at the Federal Trade Commission, 2024 looks like a bumper year. So far, fake FTC agents have stolen an average of $7,000 per ruse by telling victims to move or transfer money, María Soledad Davila Calero writes. That’s more than double the $3,000 reported in 2019. Perhaps the most obvious scam: a call from a “federal agent” who tells you to visit a Bitcoin ATM.
Training wreck
Suddenly, AI players look vulnerable on copyright infringement. Just ask Google, the first of them to be fined over training data, David Meyer reports. France’s competition authority has ordered the tech giant to pay some $270 million after a five-year battle with the country’s news outlets. That’s partly because Google lets its Gemini AI chatbot vacuum up content from press agencies and publishers—without asking for permission.
TRUST EXERCISE
“Over the last four years…I’ve witnessed the commitment of hundreds of funeral directors. We’ve accompanied them to the morgue, observed embalmings (with permission), and watched arrangements with families at their most vulnerable. Time after time I’ve seen funeral directors go above and beyond to serve their communities.
So why, despite this dedication, does the industry still have a reputation for exploiting families during their time of grief? You’ve already heard the horror stories, so I won’t retell them. Beneath these anecdotes is a foundation not of malice but of mistrust—a disparity between the good intentions of most funeral directors and the way consumers experience the industry.”
For all its good work, the funeral business has a trust problem. Zack Moy, cofounder of funeral planning company Afterword, traces it back to an outdated and counterproductive Federal Trade Commission rule from 1982. Funeral homes must share their pricing in person or by phone—but there’s still no requirement to do the same on their website. As a result, some unscrupulous operators use meetings and phone calls to bamboozle families into paying big bills.
To build public trust, the FTC’s plan to mandate online pricing for funeral homes should be just a starting point, Moy argues. He wants to see large-scale monitoring and simplified pricing too. Moy also calls for shutting down the current offender program, on the grounds that more oversight and transparency could make it redundant. At the very least, the bereaved deserve peace from price gouging.
