FTC Sues to Stop Air AI from Using Deceptive Claims about Business Growth, Earnings Potential, and Refund Guarantees to Bilk Millions from Small Businesses

The Federal Trade Commission has asked a federal court to stop Air AI from using allegedly deceptive claims about business growth, earnings potential, and refund guarantees to fleece small businesses and entrepreneurs.

The FTC alleges consumers, many of whom are small business owners, lose as much as $250,000 and are often left in debt after relying on Air AI’s false promises.

“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. “The FTC is focused on ensuring the promise of new technology isn’t misused as a means to mislead consumers.”

The Commission filed a complaint against Delaware-based technology company Air AI Technologies (also doing business as Air AI, Air.AI, Scale 13) , its owners—Caleb Matthew Maddix, Ryan Paul O’Donnell, and Thomas Matthew Lancer—and five other companies for their misrepresentations to consumers. The complaint alleges that, since at least February 2023, the company and its owners have deceptively marketed and sold business coaching materials and support, coupled with a suite of business support services called an “Air AI Access Card,” as well as licenses to resell their services.

According to the complaint, the company and its operators have advertised their flagship feature as “conversational AI,” claiming that their product can replace human customer service representatives and, in combination with other services, make business owners significant sums of money. For example, the FTC alleges Air AI and its owners make claims that consumers would earn back tens of thousands of dollars in a matter of days or months and that some consumers could make millions of dollars using these services.

The FTC alleges that, despite Air AI’s promises, consumers often do not earn the promised profits or even recoup the money paid to Air AI. The agency also alleges that Air AI and its owners deceived consumers by promising that Air AI would provide full refunds to customers who do not earn a certain amount—typically twice or three times their investment within a specified number of months—or are unsatisfied with the products for any other reason. In reality, when consumers ask for a refund, the defendants rarely honor their guarantee, often delaying and leaving consumers in the dark before cutting off communication altogether.

The Commission alleges 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, in violation of the Telemarketing Sales Rule; 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, in violation of the Business Opportunity Rule.

The Commission vote approving the filing of the complaint was 3-0. The FTC filed the complaint in the U.S. District Court for the District of Arizona against: Air AI Technologies, Inc. (also doing business as Air AI, Air.AI, Scale 13), Apex Holdings Group LLC, Apex Scaling LLC, Apex 4 Kids LLC, New Life Capital LLC, Onyx Capital LLC, and Caleb Matthew Maddix, Ryan Paul O’Donnell, and Thomas Matthew Lancer.