FTC Sues Air AI Over Deceptive Business Claims, Seeks to Halt Scheme Targeting Small Businesses

Key Takeaways

• FTC Lawsuit: The agency filed a complaint against Air AI Technologies and its operators, alleging deceptive marketing practices that misled entrepreneurs and small businesses.
• False Earnings Promises: Air AI allegedly claimed users could quickly earn tens of thousands or even millions of dollars, often through its “conversational AI” tool and business coaching services.
• Refund Guarantees in Question: The FTC says the company promised full refunds and buy-back protections but rarely honored them, leaving customers in debt.
• Financial Impact: Some consumers reportedly lost up to $250,000 after investing in Air AI’s products and services.
• Regulatory Violations: The FTC alleges violations of the Telemarketing Sales Rule and the Business Opportunity Rule, citing false or unsubstantiated claims and failures to provide required disclosures.

Deep Dive

The Federal Trade Commission (FTC) has taken legal action against Air AI Technologies, a Delaware-based company accused of deceiving small businesses and entrepreneurs with false promises of rapid earnings and ironclad refund guarantees. According to the complaint, many customers lost significant sums of money, some as much as $250,000, after buying into Air AI’s business coaching programs, access cards, and reseller licenses.

The complaint names Air AI (also known as Air.AI and Scale 13), along with its owners Caleb Matthew Maddix, Ryan Paul O’Donnell, and Thomas Matthew Lancer, and five affiliated companies. The FTC alleges the defendants marketed their offerings as transformative, advertising a “conversational AI” product that could replace human customer service representatives while generating substantial profits for clients.

The FTC claims Air AI enticed small business owners with assurances that they could recover their investments within months, sometimes two or three times over, and that some would even make millions. However, the agency says those returns rarely materialized. Instead, customers often found themselves deeper in debt.

Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection, underscored the stakes, “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. The FTC is focused on ensuring the promise of new technology isn’t misused as a means to mislead consumers.”

In addition to inflated profit claims, the FTC alleges Air AI misled customers about refund policies. Advertisements promised full refunds for unsatisfied customers or those who failed to meet specific earnings thresholds, typically two to three times their investment. In practice, the FTC says, refund requests were frequently ignored, delayed, or outright denied, with communication cut off entirely in many cases.

The complaint outlines multiple legal violations, including:

• Misrepresenting earnings potential and refund protections.
• Making unsubstantiated claims about profitability and performance.
• Failing to disclose required information under the Business Opportunity Rule, including earnings claim statements.
• Violating the Telemarketing Sales Rule by misrepresenting the risk, profitability, and refund terms of its services.

The FTC is asking the court to halt Air AI’s operations and prevent further harm to consumers. If successful, the action would mark another significant move by regulators to rein in misleading claims around artificial intelligence tools, particularly those targeting entrepreneurs and small businesses.

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