"AI washing" refers to the practice of companies making exaggerated claims about their use of artificial intelligence (AI) technology. This problem has become a concern as companies may overstate the capabilities and effectiveness of their AI solutions. Some companies may falsely claim to use AI when they are using less advanced computing methods. Others may overstate the performance of their AI compared to existing techniques or present their AI solutions as fully operational when they are not. Some companies also superficially add an AI chatbot to their non-AI software. This phenomenon has become more prevalent, with an increasing number of startups mentioning AI in their pitches, even if their solutions do not rely heavily on AI.

However, there is often a significant discrepancy between claiming AI capabilities and demonstrating tangible AI-driven results. The lack of a clear and agreed-upon definition of AI contributes to the problem. AI washing can have negative consequences for businesses, such as overpaying for technology and failing to achieve operational objectives. It can also make it challenging for investors to identify truly innovative companies and erode consumer trust in startups that are genuinely pioneering AI work. Regulators, including the US Securities and Exchange Commission, are taking notice and cracking down on false and misleading statements regarding the use of AI.