In recent guidance, AI (and other) Companies: Quietly Changing Your Terms of Service Could Be Unfair or Deceptive ("Guidance"), the FTC warned:
It may be unfair or deceptive for a company to adopt more permissive data practices—for example, to start sharing consumers' data with third parties or using that data for AI training—and to only inform consumers of this change through a surreptitious, retroactive amendment to its terms of service or privacy policy.
The FTC further warns that market participants should be on notice that any firm that reneges on its user privacy commitments risks running afoul of the law. Simply put, according to the FTC guidance a business that collects user data based on one set of privacy commitments cannot then unilaterally renege on those commitments after collecting users' data.
Managing the use of data of any type for training AI can implicate a number of legal considerations, as we have previously discussed in The Need for Generative AI Development Policies and the FTC's Investigative Demand to OpenAI. Companies that train AI models are strongly advised to develop policies to address the many legal issues that can arise. The best way to get started on developing policies is to start with a presentation to the relevant stakeholders in the company, on the legal issues, by a knowledgeable AI attorney to ensure a solid understanding of the issues that need to be addressed and the ramifications of not doing so. From there, the company can work with counsel to develop effective policies and procedures.
For more information on the FTC guidance, see here.
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