FTC Compliance Alert For Deploying AI: Changing Terms of Service or Privacy Policy, Part 2


Companies leveraging AI rely heavily on vast amounts of data, often sourced from their user bases. However, this data acquisition must be coupled with transparent consent mechanisms and robust privacy policies to uphold user rights and trust. The US Federal Trade Commission (FTC) recently announced that companies incorporating AI that fail to abide by their privacy commitments to their users and customers may be liable under the laws enforced by the FTC.  

Data tracking and consent are not mere formalities but have become fundamental pillars of ethical and legal business practices in today’s digital age. It’s not just about adhering to regulatory requirements; it’s about honoring commitments to users and safeguarding their privacy. Any attempt to bypass or manipulate these commitments, such as surreptitiously altering privacy policies to expand data usage rights, undermines user trust and can lead to serious legal repercussions. 

Regardless of technological advancements, the principles remain constant: companies must honor the privacy commitments they make to users, even if they conflict with how a company may want to leverage user data.. The FTC even noted that “Companies might be tempted to resolve this conflict by simply changing the terms of their privacy policy so that they are no longer restricted in the ways they can use their customers’ data. And to avoid backlash from users who are concerned about their privacy, companies may try to make these changes surreptitiously. But market participants should be on notice that any firm that reneges on its user privacy commitments risks running afoul of the law.”

The FTC’s commitment to combating unfair or deceptive practices underscores the importance of maintaining integrity in data usage policies. Ultimately, true consent cannot be manufactured artificially; it must be obtained transparently and ethically, respecting the rights and expectations of users. 

How Can AI and Model-as-a-Service Companies Help Assure Privacy Compliance?

Model-as-a-service companies must uphold their commitments to transparency and user consent. Logicware, NFTB’s proprietary MiddleWare platform and a CIO dashboard embraces the transformative power of Web3 combined with AI to help assure data integrity and privacy compliance. Logicware harnesses the transformative power of Web3 to fortify your AI dataset security and integrity. As a result, organizations can confidently leverage high-quality, error-resilient datasets for AI solutions and deployments, including:

  • Data Privacy and Security: Prioritize data privacy and security of datasets and models by leveraging smart contracts governing data access and usage permissions, ensuring data privacy while enabling collaboration and data-driven advancements.
  • Collaborative Model Training: Organizations and individuals can collectively train models using distributed datasets without the need for data centralization. This collaborative approach allows for the development of more robust and accurate models while maintaining data privacy and ownership.
  • Digital Incentives: Introduce tokenized incentives for data contributors in the AI ecosystem. Incentivize participation and create a sustainable ecosystem where data contributors are fairly compensated.
  • Transparent and Auditable Model Validation: Enable transparent and auditable model validation and evaluation. Independently assess the data models for fairness, bias, and performance. Foster trust in AI technologies and promote responsible and accountable use of datasets and models, through the use of smart contracts and provenance verification.
  • Marketplaces for AI Datasets and Models: The Brewery’s technology enables the creation of permission-based decentralized data marketplaces, where organizations can securely contribute, share, and monetize AI models and datasets. 

Click here for Part 1 of this series. 

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