The Truth About AI in Marketing—Don’t Get Caught AI Washing
Inspired by the Reuters article “‘AI Washing’ — What Lawyers Need to Know to Stay Ethical”
You ever been catfished? You know, met someone online who swore up and down they were Idris Elba’s American cousin, only to show up looking like the dude from your uncle’s church usher board? That’s AI washing, but in marketing.
Companies are out here dressing up basic automation like it’s some next-level artificial intelligence, throwing “AI-powered” on their branding like cheap glitter, and hoping nobody notices. That might have slid a few years ago, but the mask is off. Consumers are sharper, regulators are watching, and the consequences of lying about AI are hitting hard—just ask the firms the U.S. Securities and Exchange Commission (SEC) hit with nearly $400,000 in fines for running their mouths a little too recklessly.
What Is AI Washing?
AI washing is when a company exaggerates or straight-up fabricates its AI capabilities to seem more advanced than it really is. It’s giving ChatGPT a fancy name like “Sentient Intelligence” when all it does is autocomplete sentences. It’s a chatbot that can only answer three pre-programmed questions but is marketed as a “self-learning AI assistant.”
Tech companies aren’t the only ones guilty. Marketers, desperate to sell “innovation,” are out here making automation sound like something out of Black Mirror . And the thing about overhyping AI? People will test it. And when it doesn’t work the way you said it would, the brand takes the hit.
In March 2024, the SEC fined two investment advisory firms, Delphia (USA) Inc. and Global Predictions Inc., a combined $400,000 for making false claims about their use of AI in investment strategies. Delphia falsely asserted that its AI analyzed client data to enhance investment decisions, while Global Predictions inaccurately promoted itself as the "first regulated AI financial advisor" utilizing "expert AI-driven forecasts."
And the Federal Trade Commission (FTC) isn’t playing either. In September 2024, the FTC launched "Operation AI Comply," going after companies misrepresenting their AI capabilities. For example, DoNotPay, which marketed itself as "the world's first robot lawyer," settled with the FTC for $193,000 after allegations that it misled consumers about its AI’s legal proficiency.
These regulatory actions make one thing clear: AI washing comes with real consequences. Sure, those fines might be pocket change for companies, but no brand wants the PR disaster that comes with getting called out for lying. And this is just the beginning. As AI becomes more embedded in corporate America, the SEC and FTC are tightening the leash on deceptive marketing—and those penalties? They’re only going to get bigger.
Why AI Washing is a Problem (Beyond Just Being Embarrassing)
1. Customers Will Call You Out
Remember when companies tried to rebrand plant-based milk as “AI-engineered nutrition”? Consumers dragged them for filth. People aren’t dumb—if your AI doesn’t actually do what you claim, someone will expose you, and social media will make sure it’s loud.
2. The Legal Side is Getting Serious
Regulators are done playing. The SEC’s fines were just the beginning. False AI claims can now be considered false advertising, deceptive business practices, and, in extreme cases, fraud. And do you really want to risk your brand’s reputation (or your job) over some overhyped marketing copy?
3. It Damages the AI Industry as a Whole
When companies exaggerate AI capabilities, it creates unrealistic expectations. People start believing AI can everything, only to realize half these “AI-powered” tools are just glorified Excel macros. That makes it harder for real AI innovations to gain trust.
So, How Do We Sell AI Without Lying?
1. Say What AI Actually Does—No Fluff, No Lies
If your AI is just a chatbot, say that. If it’s automation with human oversight, make that clear. Transparency isn’t a weakness—it’s how you build trust. Shopify, for example, openly says their AI tools help automate tasks like product descriptions, but merchants still make the final call. That’s how you do it.
2. Explain AI in Plain English
Throwing around words like “neural networks” and “deep learning” without explanation doesn’t make you sound smart. It makes you sound like you’re trying too hard. Customers don’t need a PhD in machine learning; they just want to know what they’re buying. So, keep it simple.
3. Set Realistic Expectations
If your AI can suggest content ideas but still needs human input, don’t make it sound like it’s out here writing Pulitzer Prize-winning novels. Be real about the limitations so customers know what to expect.
4. Work With Legal Before You Market AI
Don’t just slap “AI-powered” on your website because the CEO thinks it sounds cool. If you don’t understand the tech, talk to your engineering and legal teams before making any claims. AI regulations are tightening, and you don’t want your company making headlines for the wrong reasons.
The Right Way to Use AI in Marketing
AI can actually be useful in marketing—when used honestly. Here are some real ways AI helps without the hype:
Personalization: AI can analyze customer data to recommend products (think Netflix’s recommendation engine).
Automation: AI can automate repetitive tasks, like email responses or ad targeting.
Predictive Analytics: AI can assist in spotting trends, but it’s not a crystal ball.
And here’s the thing—none of these require AI washing. They’re already impressive without the need for marketing fairy tales.
Final Thoughts: AI is Powerful, But Honesty is the Real Flex
Lying about AI isn’t innovation. It’s a shortcut that’ll get your company dragged, fined, or worse. Marketing is about storytelling, sure—but the best stories are true.
So, next time your team wants to throw “AI-powered” into a campaign, pause and ask: Is it really? If not, let it go. AI is only going to get bigger, and the brands that stay honest about it? They’ll be the ones that last.
Want to avoid AI-washing disasters? Start with the truth. Your customers—and regulators—will thank you.