Legal Considerations for AI Training on Customer Data

This document is a technical report that outlines the legal issues companies face when using previously collected customer data to train artificial intelligence (AI) models. It discusses the importance of adhering to privacy policies in effect at the time the data was collected, emphasizing that any changes to terms of service or privacy policies must be legally effective and require proper notice and consent. The report references guidance from the Federal Trade Commission (FTC) regarding unfair or deceptive practices, highlighting enforcement actions against companies that failed to notify consumers about changes in data usage. It details the severe consequences of improper data use, such as algorithmic disgorgement, which necessitates the deletion of data and models. Additionally, the report advises companies to develop comprehensive policies addressing legal considerations related to AI training, including risk assessment and ensuring compliance with privacy regulations. The document serves as a resource for companies navigating the complexities of AI data usage.