Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: Peddlers of ‘conversational AI’ product agree to ban to settle FTC charges, (Mar 25, 2026)

By Peter Reap, J.D., LL.M.

Air AI and its owners and operators agreed to ban on selling business opportunities and largely suspended $18 judgment.

The FTC announced that Air AI, a company that sold a “conversational” AI product that it claimed was capable of replacing human customer service representatives, along with its owners and operators, have agreed to a ban on marketing business opportunities to settle FTC charges. According to the agency, Air AI claimed that its product, in combination with other services, could make business owners significant sums of money. The FTC’s complaint alleged that the company misled many entrepreneurs and small businesses with deceptive claims about business growth, earnings potential, and refund guarantees (FTC v. Air Ai Technologies, Inc., No. 2:25-cv-03068-SMB (D. Ariz. Mar. 24, 2026)).

FTC complaint. In its 2025 complaint, the FTC alleged that since 2023, Air AI Technologies, along with five other companies and their owners have used online and telephone advertising to market their flagship product, describing it as “conversational AI.” Air AI claims the product is capable of replacing human customer service representatives. Additionally, when the product is used in combination with coaching and other services, Air AI boasted that some customers were making a million dollars.

Air AI’s customers often did not earn the promised profits or even recoup the money paid to Air AI. The FTC alleged that Air AI promised that it would provide full refunds to customers who did not earn a certain amount—typically twice or three times their investment within a specified number of months—or were unsatisfied with the products for any other reason. When consumers asked for a refund, however, the defendants rarely honored their guarantee, often delaying and leaving consumers in the dark before cutting off communication altogether.

The Commission alleged the defendants engaged in various illegal activities, including:

• making false or unsubstantiated claims that people who purchase their services will or are likely to make substantial earnings;

• falsely claiming that purchasers of the Air AI Access Card or licenses are protected by a refund or buy-back guarantee;

• misrepresenting the performance, efficacy, nature, or central characteristics of their services, their refund policies, or the risk, earnings potential, or profitability of its services; and

• failing to provide consumers with required disclosure documents and earnings claims statements, making false claims about the profitability of the investment and their refund and cancellation policies, and failing to provide refunds when consumers met the refund policy requirements.

“Companies that market AI-related tools with false promises of unrealistic investment returns and guaranteed refunds harm hardworking small business owners and undermine legitimate business’s adoption of AI,” said FTC Bureau of Consumer Protection Director Christopher Mufarrige on the complaint’s filing. “The FTC is focused on ensuring the promise of new technology isn’t misused as a means to mislead consumers.”

The complaint charged the defendants with violations of Section 5(a) of the FTC Act, the Telemarketing Sales Rule (TSR), and the FTC’s Business Opportunity Rule.

The proposed settlement order. The proposed order against Air AI includes a monetary judgment of $18 million, which will be largely suspended based on the company’s and operators’ inability to pay the full amount, requiring the operators of Air AI to pay $50,000 to the Commission for consumer relief. Under the proposed order, Air AI and its operators are banned from:

• Selling or marketing any business opportunity;

• Making false claims or misrepresentations while telemarketing or otherwise violating the TSR;

• Making false claims or misrepresentations while selling any goods and services; and

• Making earnings claims without adequate substantiation or disclosure.

The Commission vote approving the filing of the proposed order was 2-0. The FTC filed the proposed order in the U.S. District Court for the District of Arizona.

The Case is No. 2:25-cv-03068-SMB.

Judge: Brnovich, S.

Attorneys: Lauren Rivard for the FTC. Edward Alipio Salanga (Quarles & Brady LLP) for Air AI Technologies Inc.

Companies: Air AI Technologies Inc.

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