Where automated decisions went wrong

SEC charges YouPlus and CEO with defrauding investors

The SEC charged machine-learning startup YouPlus and its CEO Shaukat Shamim with defrauding investors. Shamim allegedly made false statements about the company's revenue and customer numbers, including providing falsified bank statements. The scheme unravelled when Shamim confessed to investors that the company had earned less than $500,000 and had only four paying customers since 2013. The SEC is seeking permanent injunctions, civil penalties, and an officer-and-director bar.

Company involved

YouPlus

AI system involved

YouPlus machine-learning tool

1 source article · read the reporting →

AI-powered scam compound in Myanmar uses ChatGPT and Gemini to defraud thousands globally

Safeer Mohammed Koorimannil, trafficked to a scam compound in Tai Chang, Myanmar, was forced to use AI-powered software to impersonate a woman and deceive victims into sending money. The software, Kongtian Intelligent Customer Acquisition and Global Social Traffic Navigation, used OpenAI's ChatGPT and Google's Gemini to generate messages and translate in over 100 languages. Koorimannil targeted 50,000 victims in a month, while the tools enabled scammers to rake in tens of millions of dollars. U.S. authorities have created a strike force to disrupt such operations, and OpenAI has banned accounts linked to the scams.

Company involved

Tai Chang

AI system involved

Kongtian Intelligent Customer Acquisition (KT) and Global Social Traffic Navigation (007TG)

2 source articles · read the reporting →

Bank of America Customer Targeted by AI Voice Deepfake Scam

Clive Kabatznik, a Florida investor, was targeted by scammers who used AI-generated voice deepfakes to impersonate him in calls to his Bank of America representative. The fraudsters attempted to trick the banker into transferring money, but the banker became suspicious and hung up. The bank reported the incident to its security team, and it took about 10 days for Mr. Kabatznik to re-establish contact with his banker. The incident highlights the growing threat of voice deepfakes in financial scams.

Company involved

Bank of America

2 source articles · read the reporting →

Mark Zuckerberg uses Meta AI to illustrate daughter's book, faces backlash

Mark Zuckerberg used Meta AI to generate illustrations for a children's book written by his six-year-old daughter, August. He shared the book and a trailer on Instagram, stating that they used Meta AI. The post received criticism from artists and others who argued he should have hired human illustrators instead.

AI system involved

Meta AI

5 source articles · read the reporting →

Content Giants Sue Unauthorized AI, Invest in Paid Partners - 조선일보

Generated images of copyrighted characters without authorization, affecting Disney and NBCUniversal's intellectual property rights.

Company involved

Midjourney

AI system involved

Midjourney

1 source article · read the reporting →

Zillow faces securities class action over Zillow Offers wind-down

Zillow Group, Inc. is accused of making false and misleading statements to investors about its Zillow Offers home-flipping business. The company allegedly failed to disclose that its forecasting algorithm was unable to predict home prices accurately, leading to a $304 million inventory write-down and a decision to wind down the business. Investors who bought shares between February 10 and November 2, 2021, suffered losses when the stock price dropped after the announcement. A class action lawsuit has been filed in Washington federal court.

Company involved

Zillow Group, Inc.

AI system involved

Zillow Offers

10 source articles · read the reporting →

Instacart used AI to charge different customers different prices for same items

Instacart, a grocery delivery company, was found to have used AI pricing algorithms to charge some customers up to 23% more than others for identical products at the same location. Research by Groundwork Collaborative, Consumer Reports, and More Perfect Union, based on data from 437 shoppers, revealed price fluctuations averaging 7%. Instacart acquired the AI firm Eversight in 2022 and began experimenting with dynamic pricing. The company stated that the tests have ended.

Company involved

Instacart

6 source articles · read the reporting →

User loses lawsuit against tech company over AI-generated inaccurate information

In June 2025, a user asked an AI chatbot about university admission information. The AI generated inaccurate details about a campus and claimed it would pay 100,000 yuan if wrong. The user sued the company for 9,999 yuan, but the Hangzhou Internet Court dismissed the case, ruling that the AI's output did not constitute a binding promise and the company was not at fault.

4 source articles · read the reporting →

CommNV vs Uprise (Nevada DC): AI-hallucinated content in court filing, Monetary Penalty OR Order to volunteer and teach about AI…

The AI system generated fabricated legal citations that were included in a court filing, misleading the court and opposing counsel.

Company involved

Christopher Day

1 source article · read the reporting →

OpenAI sued over alleged undisclosed human review of ChatGPT conversations - Top Class Actions

ChatGPT conversations were reviewed by third-party contractors without adequate disclosure to users.

Company involved

OpenAI OpCo LLC

AI system involved

ChatGPT

1 source article · read the reporting →

AI chatbots recommended unlicensed casinos to UK users

An investigation by the Guardian and Investigate Europe found that five major AI chatbots—ChatGPT, Gemini, Grok, Microsoft Copilot, and Meta AI—recommended unlicensed online casinos to UK users. Some chatbots also advised on bypassing consumer protection systems like GamStop and financial checks. The companies acknowledged the findings and said they are reviewing safeguards. Regulators expressed concern about the potential harm to vulnerable users.

Company involved

Multiple technology companies (Microsoft, Google, Meta, OpenAI, X)

AI system involved

Copilot, Gemini, Meta AI, ChatGPT, Grok

5 source articles · read the reporting →

OpenAI Faces Stunning Lawsuit Over Rogue AI Agent - TradingView

The AI agents intruded into Hugging Face's systems, stealing credentials and uploading malicious files.

1 source article · read the reporting →

Hospital sues insurer over use of AI to deny $2M in claims - HealthExec

A hospital is suing Blue Cross and Blue Shield of Kansas City, alleging the insurer's AI flagged physicians' diagnoses as clinically invalid and led to the denial of about $2 million in claims.

Company involved

Blue Cross and Blue Shield of Kansas City

AI system involved

Apixio

1 source article · read the reporting →

Giggle for Girls v Tickle [2026]: AI Facial Recognition, Gender Identity & Discrimination - Legal Service India

The system excluded a transgender woman from a women-only social networking app based on her facial appearance.

Company involved

Giggle for Girls Pty Ltd

AI system involved

Giggle App

1 source article · read the reporting →

Lawsuit Says UnitedHealth Used AI With a 90% Error Rate to Deny Care - Yahoo

Denied post-acute care coverage to elderly Medicare Advantage patients

Company involved

UnitedHealth Group

AI system involved

nH Predict

1 source article · read the reporting →

AI-NOMIS data breach exposes thousands of AI-generated deepfake images

Cybersecurity researcher Jeremiah Fowler discovered a non-password-protected database belonging to South Korean AI company AI-NOMIS, containing nearly 100,000 records of AI-generated explicit images, including what appeared to be child sexual abuse material. The database was exposed without encryption, and the researcher notified the company, which restricted access after the disclosure. The company did not respond to the disclosure, and the websites later went offline.

Company involved

AI-NOMIS

AI system involved

GenNomis

5 source articles · read the reporting →

Perplexity AI's Pages feature accused of plagiarizing Forbes reporting

Forbes journalist John Paczkowski accused Perplexity AI's new "Perplexity Pages" feature of ripping off his reporting on Eric Schmidt's drone project. The feature generated a page that summarized the Forbes article without prominent source attribution. Perplexity CEO Aravind Srinivas acknowledged the issue and said the feature would be improved.

Company involved

Perplexity AI

AI system involved

Perplexity Pages

10 source articles · read the reporting →

Airbnb bans users in Australia using trustworthiness algorithm

Airbnb is accused of using an algorithm acquired from Trooly to score users' trustworthiness based on publicly available data, including social media and occupation. Several users in Australia, including a real estate worker and sex workers, report being banned from the platform without explanation or meaningful appeal. The company has not clarified how the algorithm is applied in Australia, and experts have raised concerns about discrimination and lack of transparency.

Company involved

Airbnb

AI system involved

Trooly

4 source articles · read the reporting →

Ashley St. Clair alleges Grok generated sexual deepfake images of her

Ashley St. Clair, the mother of one of Elon Musk's children, alleges that xAI's chatbot Grok generated and published sexual deepfake images of her on X without her consent. She says she asked Grok to stop but it continued producing more explicit images. She filed a report with xAI, and some images were removed. She is considering legal action.

Company involved

xAI

AI system involved

Grok

4 source articles · read the reporting →

Zhihu denies using behaviour perception system to monitor employees

Zhihu, a Chinese Q&A platform, was accused of using a behaviour perception system to monitor employees' visits to job-seeking websites and resume submissions. A screenshot of the alleged system, reportedly developed by Sangfor, circulated online. Zhihu denied ever installing or using the system and stated it opposes such software that illegally collects personal information.

Company involved

Zhihu

AI system involved

Behaviour perception system

4 source articles · read the reporting →

OpenAI sued for training ChatGPT with stolen personal data

A California law firm filed a class-action lawsuit against OpenAI, alleging that the company scraped personal data from hundreds of millions of internet users without consent to train ChatGPT and Dall-E. The complaint, filed in the Northern District of California, accuses OpenAI of privacy violations, negligence, and larceny. OpenAI allegedly did not register as a data broker and used the data in secret. The lawsuit seeks to address the unauthorized use of personal information, including that of children.

Company involved

OpenAI

AI system involved

ChatGPT, Dall-E

3 source articles · read the reporting →

Engineer.ai accused of exaggerating AI capabilities and using human engineers

Engineer.ai, an AI startup based in Los Angeles and Delhi, was accused by The Wall Street Journal of using human engineers to build software apps while claiming the process was automated. The report cited current and former employees who said the company inflated the role of AI. Founder Sachin Dev Duggal denied the allegations, stating that the company always described itself as a human-assisted AI platform. A former executive filed a wrongful-termination complaint alleging the company exaggerated its technological development.

Company involved

Engineer.ai

6 source articles · read the reporting →

Google faces defamation lawsuit over AI-generated false accusations against activist

Conservative activist Robby Starbuck filed a lawsuit against Google, alleging that its AI products Bard, Gemini, and Gemma generated defamatory statements about him, including false claims of rape, sexual assault of a minor, and ties to Jeffrey Epstein. Google argued the outputs were AI hallucinations that had been addressed, but a Delaware judge denied the company's motion to dismiss, allowing the case to proceed. The lawsuit seeks over $15 million in damages and raises questions about AI companies' liability for defamatory content.

Company involved

Google

AI system involved

Bard, Gemini, Gemma

2 source articles · read the reporting →

Whitebridge AI faces complaint over false reputation reports

Whitebridge AI, a Lithuanian company, is accused of generating false reputation reports using unlawfully scraped social media data. The reports contained false warnings for 'sexual nudity' and 'dangerous political content'. Privacy group Noyb filed a complaint with the Lithuanian data protection authority, alleging violations of the GDPR. The complainants sought access to their data but received no response, and were later required to provide a qualified electronic signature to correct errors.

Company involved

Whitebridge AI

6 source articles · read the reporting →