Gensler warns on AI washing

Artificial intelligence is all around—but it’s not that all around, and that can cause problems for businesses.

“AI washing,” or falsely touting AI capabilities, is increasingly being used to characterize businesses that make baseless claims about the use of AI in their orgs. Just like when some totally chemical body wash proudly wears a “sustainable” or “green” label. It’s greenwashing for tech.

In a 2019 study of European startups, 40% of alleged “AI startups” hardly used any artificial intelligence. More and more companies report using AI, but so long as AI hype continues, the temptation to mislead the public about the depth of your AI stack will remain tempting—and susceptible to legal crackdown.

That’s especially true now that Securities and Exchange Commission Chair Gary Gensler has taken note—and he’s not pleased. At a conference hosted by news site The Messenger, Gensler said companies are required to provide “full, fair, and truthful” disclosures about their use of AI.

In September, the SEC cracked down on greenwashing with an updated rule requiring investment companies with names suggesting a particular form of investment (say, green investments) to funnel at least 80% of its portfolio into those investments.

The rule also covered “thematic names, such as those that reference popular economic themes or investment strategies—like artificial intelligence, big data, or health innovation,” Gensler noted at the time.

And now, he’s driving a warning home. Per the Wall Street Journal, in response to an audience question, Gensler said simply: “Don’t do it. One shouldn’t greenwash and one shouldn’t AI wash.”

Noted.