Auditing AI-Washing in German Startups: A Mixed-Methods Study of Marketing Claims and Perceptions

2026-10-08

AI Summary

This study addresses the pervasive marketing malpractice whereby startups exaggerate artificial intelligence capabilities, thereby eroding consumer trust. Employing a mixed-methods approach, the research audits one hundred German startups and conducts expert interviews, innovatively developing a seven-dimensional annotation codebook to systematically evaluate discrepancies between AI claims and actual capabilities alongside associated ethical risks. The findings reveal that investor incentives rewarding unverifiable labels and consumer credulity constitute key causal mechanisms, with thirty-eight percent of the sampled companies exhibiting severe ethical vulnerabilities. By providing a standardized assessment tool for identifying deceptive AI marketing, this work recommends integrating AI-related promotional claims into regulatory disclosure frameworks to mitigate ethical misconduct.

Abstract

AI-washing is the use of 'AI' as a marketing term where products' claims are exaggerated, likely to capture the hype from investors and consumers. In this paper, we examine how startups market AI and how people perceive those claims. We audited the German startup market, applying an annotation codebook of seven dimensions to 100 startups and conducting 63 expert interviews. Startups exaggerated AI capability in three forms: claims without inspectable evidence, performance numbers without methodology, and claims without acknowledged limits. The capabilities they claimed rarely matched the underlying system, and consumers who had encountered exaggerated claims before withdrew trust from later AI marketing. AI-washing has also been linked to the marketing of unethical products: 38% of the sample were flagged for moderate or serious ethical concern, in domains such as surveillance and automated decisions in regulated fields. Together these findings show how AI-washing happens: founders exaggerate capability to attract investors who reward AI branding they cannot verify, and consumers in unfamiliar domains take the marketing at face value. We recommend that startup AI claims be brought under disclosure requirements, with the codebook offered to regulators, investors, and consumer-protection bodies for routine audits.

Problem

• AI-washing
• startup marketing
• exaggerated AI claims
• consumer trust
• AI ethics

Innovation

• AI-washing
• Mixed-methods audit
• Annotation codebook
• Startup marketing claims
• AI ethics