On August 25, 2025, the Federal Trade Commission filed a complaint against Air AI, alleging the company and its owners made overblown claims about the availability and capabilities of its artificial intelligence (AI) tools to replace human sales representatives, as well as deceptive claims about the business growth, earnings potential, and refund guarantees from the defendants’ business coaching materials and support.
This is the third case during the Trump administration the FTC has brought against alleged “AI washing,” which refers to unfounded claims about the capabilities or efficacy of AI products or services (derived from the term “greenwashing,” where businesses make unwarranted environmental benefit claims).
Primary FTC Allegations
According to the complaint, Air AI “deceptively marketed and sold a series of products and services aimed at entrepreneurs and small businesses,” which included “conversational AI technology” that was claimed to be capable of replacing, and was better than, full-time human sales agents because the technology required no ramp-up time or management. The FTC claims that for some purchasers, this conversational AI was either unavailable or “faulty” with basic tasks such as making calls, scheduling, recording emails, or answering questions accurately. Further, the FTC alleges that most consumers did not make the profits promised by the defendants. The complaint alleges violations of Section 5 of FTC Act, the Telemarketing Sales Rule, and the Business Opportunity Rule.
Takeaways
The case suggests a few key points to businesses marketing AI-enabled products and services:
- Combating AI washing remains an FTC priority, notwithstanding the White House’s AI Action Plan directive to the FTC to review (1) investigations started under the prior administration to ensure they do not advance theories that unduly burden innovation and (2) FTC final orders, consent decrees, and injunctions, and, where appropriate, seek to modify or set aside any that unduly burden AI innovation. FTC AI washing cases like this, which do not advance novel theories of liability, appear likely to continue.
- The products at the heart of the Air AI complaint are examples of agentic AI—autonomous AI programs that manage complex processes with little or no human intervention. Widely considered the “next big thing” in AI, agentic AI will almost certainly attract regulatory scrutiny at the federal and state levels.
- Businesses are often the buyers of AI products and services. This case and prior FTC actions, like Evolv, show that the FTC takes the position that its consumer protection authority applies to business-to-business transactions, particularly those affecting small businesses. Companies selling AI products and services, including to enterprise customers, should review their marketing materials for compliance with FTC advertising principles.
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