Federal Enforcers target “AI Washing”

The SEC has entered into settlements on charges with two investment advisers based on misleading statements in their SEC filings regarding their use of Artificial Intelligence technology. Late last year, the Chair of the SEC had warned against overstating use of AI technology so as to mislead investors, and the settlements this week show an intent to follow-through with this priority. The SEC’s efforts to protect investors dovetail with the FTC’s warnings and enforcement actions against misleading consumers by overstating AI capabilities. Companies in the AI space, particularly those with SEC filing obligations, should be aware of this enforcement activity when making claims regarding their technology.

Mitigating AI Risks for Beauty Companies

Kelly Bonner and Agatha Liu of Duane Morris LLP shared their insights and experience with CosmeticsDesign on the risks of incorporating AI technology into business practices, and how can beauty companies protect themselves.

Common uses for AI in beauty & associated risks

One of the most common uses for AI technology is personalizing products and offering personalized product recommendations. “As beauty has become increasingly personalized,” Bonner explained, “companies are increasingly deploying AI technologies to enable customers to visualize new looks (virtual try-on tech) or communicate with customers via chatbots that act as virtual assistants and offer personalized product recommendations.”

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Decoding and Leveraging AI Regulations for Beauty Sector in US and EU

Duane Morris’ Agatha Liu and Kelly Bonner were interviewed by Personal Care Insights about the challenges and opportunities beauty companies face while using AI to appeal to younger consumer demographics. Below is an excerpt of the article.

How does the competitive landscape of the beauty industry impact businesses’ use of AI technologies, especially when it comes to targeting younger consumer segments?
Bonner
: The highly competitive nature of the beauty industry, with its desire to appeal to younger consumers, is certainly a key driver in beauty brands embracing AI tools to offer enhanced customer shopping experiences.

Can you provide some context about US AI regulations that the beauty industry should know? What do you expect is coming, especially considering the AI Act in the EU?

Liu: The EU AI Act imposes specific obligations on the providers and deployers of so-called high-risk AI systems, including testing, documentation, transparency and notification duties.

To read the full interview, please visit the Personal Care Insights page.

Calif. Court Dismisses AI Suit Involving Discrimination

In Mobley v. Workday, Inc., Case No. 23-CV-770 (N.D. Cal. Jan 19, 2024) (ECF No. 45), Judge Rita F. Lin of the U.S. District Court for the Northern District of California dismissed a lawsuit against Workday involving allegations that algorithm-based applicant screening tools discriminated applicants on the basis of race, age, and disability. With businesses more frequently relying on artificial intelligence to perform recruiting and hiring functions, this ruling is helpful for companies facing algorithm-based discrimination lawsuits in terms of potential strategies to attack such claims at the pleading stage.

Read more on the Duane Morris Class Action Defense Blog.

The AI Update | January 26, 2024

#HelloWorld. January has not been especially frantic on the legal-developments-in-AI front. Yes, we know the anticipated final text of the EU AI Act was published unofficially, but the final vote hasn’t happened yet, so we’re biding time for now. Meanwhile, in this issue, we check in with state bar associations, SAG-AFTRA, and the FTC. They have things to say about AI policy too, so we’ll listen. Let’s stay smart together.  (Subscribe to the mailing list to receive future issues.)

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The AI Update | January 11, 2024

#HelloWorld. It’s 2024 and we… are…back. Lots to catch up on. AI legal developments worldwide show no signs of letting up, so here’s our New Year’s resolution: We’re redoubling efforts to serve concise, focused guidance of immediate use to the legal and business community. Let’s stay smart together. (Subscribe to the mailing list to receive future issues.)

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White House Unveils New AI Executive Order

On October 30, 2023, President Joe Biden signed the new Executive Order on Safe, Secure and Trustworthy Artificial Intelligence. The order is built on previous AI initiatives based on voluntary commitments the White House secured from leading AI companies and represents the first major binding government action on the technology. As such, the executive order depicts the latest U.S. government efforts in monitoring and regulating the risks of AI while also harnessing its potential in the economic, national security and social spheres.

Read the full Alert on the Duane Morris website.

Webinar: Get Smart with AI: Best Practices for Using AI in Business

Duane Morris will present Get Smart with AI: Best Practices for Using AI in Business, a webinar on the benefits, risks and mitigation strategies for using AI in business, on Tuesday, October 17, 2023, from 12:00 p.m. to 1:00 p.m. Eastern.

REGISTER

About the Program

The AI revolution has already begun. To remain competitive in the AI era, businesses must learn and adapt as quickly as AI technology does. Topics include: introduction to AI; global response to AI including relevant laws and initiatives; possible uses of AI in business; and specific AI risks and mitigation strategies for copyright and IP rights and ownership issues, privacy and security compliance, employment law compliance, scraping of business data, and other takeaways. 

Speakers

    • Sandra A. Jeskie
    • John M. Benjamin
    • Matthew C. Mousley
    • Luke P. McLoughlin
    • Jennifer M. Lantz
    • Alex W. Karasik

Learn more about the event and Duane Morris’ artificial intelligence team.

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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