Published on January 8, 2024, 8:21 am

As the hype around Artificial Intelligence (AI) continues to grow, regulators are becoming increasingly concerned about the validity of AI claims made by vendors. In 2023, there was a surge in ambitious technology announcements from vendors, but this year, regulatory agencies will be scrutinizing these claims more closely.

Gary Gensler, Chair of the U.S. Securities and Exchange Commission, recently cautioned companies against exaggerating or misstating their use of AI in their businesses. This echoes similar warnings from enforcement officials in the past year. It is expected that regulatory agencies will continue to focus on monitoring AI claims, which means that Chief Information Officers (CIOs) also need to be vigilant.

The term “AI washing” refers to marketing efforts where vendors make false or misleading claims about the capabilities of their solutions. It is important for businesses to understand that AI is crucial and the claims made about it should be supported by evidence. The Federal Trade Commission has warned that unsupported claims could lead to regulatory action.

When it comes to implementing AI technologies, both vendors and businesses have a responsibility. Vendors should provide adequate proof of their claims and not hide behind the black-box nature of AI technology. Businesses must also take accountability for the solutions they deploy and ensure they understand any potential risks associated with working with third-party companies.

A recent case involving Rite Aid highlights the consequences of unsubstantiated AI claims. The company was banned by the FTC from using AI-based facial recognition technology for surveillance after failing to obtain adequate documentation of vendor claims. Moreover, the system generated thousands of false-positive matches that disproportionately impacted certain communities.

Regulatory interest in AI has increased due to its growing use by employees in the workplace and technology leaders feeling pressure to turn hype into tangible results. To protect their businesses against misleading claims, enterprise leaders should prioritize due diligence when vetting AI solutions.

Procurement teams play a vital role in this process and should have the necessary expertise to ask the right questions about data privacy, copyright liability, and model limitations. Collaboration with experienced professionals who understand the AI space is important. It is crucial to look for red flags during vendor discussions and carefully examine a provider’s history and logic behind their use of AI.

Due diligence in assessing AI solutions is an ongoing process, as the market constantly evolves. CIOs should regularly review model behavior and performance by use case. Delegating responsibilities to skilled employees can help ensure nothing slips through the cracks.

As the AI landscape continues to expand, staying informed about industry trends is essential. By subscribing to newsletters from reliable sources, such as CIO Dive, technology leaders can stay updated on the latest news, trends, and analysis in the field of AI.

While it’s important to leverage the transformative potential of AI, it’s equally critical to approach its adoption with caution and verify claims made by vendors. With proper due diligence and a focus on evidence-based decision-making, businesses can navigate the complex world of AI technology successfully.


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