AI washing is when companies exaggerate — or outright fabricate — their use of artificial intelligence in products. This deceptive marketing tactic misleads consumers and investors, inflating expectations and creating a distorted image of a product’s capabilities to the point where it can ultimately erode trust in the entire AI industry.
The rapid advancement of artificial intelligence has fueled a massive surge in demand for AI (particularly generative AI) across virtually every sector. Companies seeking to capitalize on the hype may engage in AI washing to differentiate themselves from competitors and secure more funding, at the risk of undermining confidence in genuine AI innovation.
AI Washing Definition
AI washing is a marketing practice where companies overstate or falsely claim that their products use artificial intelligence. By riding the wave of AI’s hype and perceived value, these companies aim to attract customers and investors with promises that often don’t match reality.
What Is AI Washing?
AI washing is a marketing strategy that exploits the buzz surrounding artificial intelligence. As AI becomes synonymous with innovation and efficiency, companies increasingly use the term as a selling point — often overstating or misrepresenting their actual use of the technology to appear more advanced than they really are.
This is just the latest ruse in a long line of corporate deception. Companies have long baited customers with promises of sustainability through greenwashing, and inclusivity through rainbow washing. Now, they are perpetuating false or inflated promises of efficiency and innovation through AI washing.
Some claim to use AI but in reality are relying on simpler technology (or even humans), while others completely overstate the capabilities of their AI products, or imply their product is fully functional when it’s not. And some just slap a chatbot onto their existing software, with no real AI integration. Eventually, these misrepresentations can create unrealistic expectations, leading to disappointment when the products fail to live up to their promise.
How to Identify AI Washing
Detecting AI washing requires a critical and informed approach. Here are some red flags to watch for:
- Vague claims: Consumers and investors should be wary of products that use terms like “AI-powered” or “machine learning” without providing specifics about how these technologies are implemented.
- Overpromising results: Claims that sound too good to be true, such as guaranteeing perfect accuracy or instant results, should be approached with skepticism.
- Misaligned functionality: Compare the product’s described capabilities with its actual performance. If there’s a significant gap, AI washing could be at play.
- Absence of expert endorsements: Legitimate AI technologies often receive recognition or validation from industry experts or credible organizations. A lack of such endorsements might signal questionable claims.
Why Is AI Washing a Problem?
AI washing poses significant challenges for consumers, businesses and the broader AI industry.
Erodes Trust
In the long run, engaging in AI washing can damage a company’s reputation and erode customer loyalty. Investors may also become wary of funding AI-related ventures, fearing exaggerated claims and unfulfilled promises.
On a larger scale, AI washing can undermine efforts to address the ethical challenges of AI development. By misrepresenting their products, companies may sidestep critical evaluations of fairness, transparency and accountability — allowing biases and inequality to continue in such a way that it compromises efforts to create AI systems that are truly safe and beneficial for all.
Inflates the AI Bubble
AI washing distorts the true capabilities of artificial intelligence, causing an overinvestment in businesses that fail to fully deliver on their promises. Companies inflate their use of AI, prompting investors to unwittingly pour money into ventures with little substance or growth opportunity. The result: an unsustainable market where expectations outpace reality.
“The expectations of [AI] are far beyond what the technology can deliver,” Xun Wang, chief technology officer at marketing automation company Bloomreach, previously told Built In. “There’s a whole bunch of people who think that they can deploy this technology to solve everything and replace everything. But that’s just not going to happen.”
Eventually, the bubble will burst. And many of the companies banking on AI’s long-term success will experience significant financial losses, resulting in layoffs and a decrease in innovation that could last for years. It will also likely lead to a loss of trust in AI, which could hinder future investments and development down the line.
Legal Implications
AI washing deceives customers and investors, convincing them to spend their money with misleading claims. As a result, regulators like the Federal Trade Commission (FTC), which protects consumers, and the U.S. Securities Exchange Commission (SEC), which protects investors, have turned their attention to the practice.
“If you are rushing to make claims about using AI in your investment processes to capitalize on growing investor interest, stop. Take a step back, and ask yourselves: do these representations accurately reflect what we are doing or are they simply aspirational?” Gurbir Grewal, the director of the SEC’s Division of Enforcement, said in a statement. “If it’s the latter, your actions may constitute the type of ‘AI-washing’ that violates the federal securities laws.”
In 2024, the SEC settled its first AI-related charges against investment advisers Delphia and Global Predictions for making “false and misleading statements” about their “purported use” of artificial intelligence, according to a press release. Similarly, the FTC has taken legal action against at least five companies engaged in AI washing as part of a new initiative called Operation AI Comply, which aims to “crack down” on “deceptive AI claims and schemes.”
How to Avoid AI Washing
To prevent AI washing, companies should prioritize transparency and honesty in their marketing. Here are some actionable steps:
- Provide clear documentation: Companies should offer detailed explanations of how AI is integrated into their products or services. This includes outlining the specific technologies used, their capabilities and their limitations.
- Use accurate terminology: Companies should avoid using buzzwords or vague language that can mislead customers. Instead, they should describe the product's functionality in precise and straightforward terms.
- Validate claims with evidence: Any claims about AI capabilities should be supported by demonstrable evidence, such as case studies, technical documentation or third-party testimony.
- Call on experts: Companies should collaborate with AI professionals to ensure marketing materials accurately represent the technology.
- Educate stakeholders: Companies should foster an understanding of AI among employees, investors and customers. An informed audience is less likely to fall prey to exaggerated claims and more likely to appreciate genuine innovations.
Frequently Asked Questions
How do you identify AI washing?
To identify instances of AI washing, look out for vague claims, a lack of technical details, the absence of expert endorsements and capabilities that sound too good to be true. Scrutinize marketing materials and seek third-party validations to verify the authenticity of AI-related claims.
Why is AI washing a problem?
AI washing stifles genuine innovation and creates unfair competition. It also undermines transparency and accountability, leading to potential ethical issues and an overall distrust in the AI industry.
How do you avoid AI washing?
To avoid AI washing, companies should prioritize transparency, provide clear documentation, use accurate terminology, validate claims with evidence, collaborate with experts and educate stakeholders about AI capabilities and limitations.
