What is AI Washing? The new trend among some companies

What is AI Washing? The new trend among some companies

AI Washing refers to those entities that engage in false marketing, either by claiming to use AI software when they do not or by exaggerating the effectiveness of their AI compared to existing techniques. This term is similar to other forms of deception, such as greenwashing, which involves exaggerating a product’s environmental credentials.

Birth of AI Washing

This English term has been coined in recent years due to the success of such technologies in products like autonomous vehicles, virtual assistants like Siri and Alexa, or recommendation systems used by Netflix or Amazon, which have positioned artificial intelligence as a competitive advantage over products that do not have it.

As a result, many companies have sought to join this trend to attract potential customers to their product. However, on many occasions, they have resorted to exaggerating their products’ features and even to deception to achieve this.

Deceptive Marketing Technique

First, it is necessary to clarify that until the approval of Regulation (EU) 2024/1689 of the European Parliament and of the Council of June 13, 2024, which establishes harmonized rules regarding artificial intelligence, there was no specific regulation that provided a homogeneous definition of the term artificial intelligence. This implies that many entities probably believed they were using an AI product when, according to the current definition, they were not.

The mentioned Regulation defines an “AI system” as any machine-based system designed to operate with varying levels of autonomy and capable of showing adaptive capacity after deployment. For explicit or implicit objectives, it infers from the input information it receives to generate output results, such as predictions, content, recommendations, or decisions, which can influence physical or virtual environments. Therefore, any advertising that does not conform to this definition would be considered a deceptive marketing technique.

Using deceptive marketing techniques can have legal consequences, especially for companies selling to consumers and users. For example, Article 5 of the Unfair Competition Law defines a deceptive act as “any conduct that contains false information or information that, although truthful, due to its content or presentation, induces or may induce error among recipients, being likely to alter their economic behavior.” In this case, if a buyer decides to purchase a product because they believe it has AI and it ultimately does not, it would be an act of unfair competition, whether it is carried out with consumers, users, or companies, and is punishable even with damage compensation.

Reputational Damage

In this case, it is important to consider the reputational damage that AI products could suffer. AI washing can erode trust in genuine AI innovations, as consumers and companies may become skeptical of claims about AI.

Moreover, for entities that use AI washing, it is essential to remember that damage compensation is not the only consequence of deceptive advertising. They may also be required to make a public retraction and even publish a statement confessing the activity carried out.