FTC Settles with Air AI Technologies Over Deceptive Conversational AI Claims and Sham Refund Guarantees

On March 24, 2026, the Federal Trade Commission (FTC) announced a proposed settlement resolving its August 2025 federal court complaint against Delaware-based technology startup Air AI Technologies, Inc. (also doing business as Air AI, Air.AI, and Scale 13), along with several affiliated entities and its individual founders (Caleb Matthew Maddix, Ryan Paul O'Donnell, and Thomas Matthew Lancer).

The FTC's complaint, filed in the U.S. District Court for the District of Arizona, alleged that the defendants had run a multi-million dollar scheme since February 2023. They deceptively marketed a suite of AI-related business support services, business coaching, and licenses to resell their services. The flagship feature was marketed as "conversational AI" that could replace human customer service representatives and generate massive, guaranteed profits. The FTC alleged that the defendants claimed consumers would earn back tens of thousands of dollars in days or months, and that some could make millions.

In reality, consumers rarely earned any profits, and the defendants failed to honor their "double or triple your investment" refund guarantees, leaving many small business owners up to $250,000 in debt. The FTC charged the defendants with violating the FTC Act, the Telemarketing Sales Rule, and the Business Opportunity Rule.

FTC Bureau of Consumer Protection Director Christopher Mufarrige noted:

"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."

Under the March 2026 proposed settlement:

• The order imposes an $18 million monetary judgment against the defendants.
• Due to the defendants' inability to pay, the judgment is largely suspended, requiring them to pay $50,000 for consumer redress.
• The defendants are permanently banned from selling or marketing any business opportunity, making false telemarketing claims, and making earnings claims without adequate substantiation or disclosure.