Despite almost a quarter of US adults using ChatGPT and thousands of companies integrating artificial intelligence into their operations, many consumers haven’t ditched the fear of a Terminator-style AI takeover. That could be bad news for brands trying to convince customers to buy their AI-stamped products.

A study published in the Journal Of Hospitality Market And Management in June found consumers were less interested in purchasing an item if it was labeled with the term “AI”. Across a series of studies, participants were asked about their intention to buy a product - from televisions to vacuums to consumer and health services - labelled with one of two descriptors, “AI-powered” or “high tech”.

Among about 200 participants across age and gender demographics, the impact of AI labels on a consumer’s willingness to buy a product was unanimous, according to Dogan Gursoy, hospitality management professor at Washington State University's Carson College of Business and one of the study’s authors.

“In every single case,” Gursoy told Fortune, “whenever we mentioned ‘AI’ versus ‘high tech’, consumers’ purchase intention went down.”

Indeed, shoppers are largely threatened by AI, with only 30% of respondents saying they trust generative AI, according to a Cognizant survey of 1,000 US consumers. Almost three-fourths of respondents believed genAI would increase corporate profits, and 28% believed genAI would benefit consumers the least compared to corporations, small businesses, employees, and the government.

Brands have largely overestimated consumer trust in AI, Gursoy said, and he has the research to support his claim. When consumers had lower emotional trust, a critical factor in determining if a shopper will buy a product, they also had low purchase intentions for products labeled “AI-powered”. Purchase intentions and emotional trust were lower for items participants considered higher risk, such as cars.

Identity threats and existential fears

For many consumers, the anxiety around AI stems from an identity threat the technology poses, Gursoy said. The fear of AI taking over humanity - exemplified in Gen Z’s fear of losing their jobs to the technology - is still salient.

“It threatens my identity, threatens the human identity,” Gursoy said. “Nothing's supposed to be more intelligent than us.”

These fears have been exacerbated by consumer concerns over privacy, with most consumers saying their trust in AI has already been eroded by organisations using the technology, per Cisco’s 2023 Consumer Privacy Survey. Lawmakers are reacting accordingly: The proliferation of deepfake video and audio content caused Massachusetts Attorney General Andrea Campbell to sound the alarm over AI, warning companies that use the technology that they must abide by the commonwealth’s consumer-protection and data-privacy laws. Amazon’s use of a palm-scanning payment system at Whole Foods stores sparked concern from cybersecurity experts.

“Any time you entrust your data with a private corporation, you’re trusting that company to keep that data safe. And most of the time, you probably shouldn’t,” Evan Greer, director of tech regulation advocacy group Fight for the Future, told CNBC.

Amazon Web Services’ chief information security officer Chris Betz said in a June blog post the company is prioritising security as it continues to invest in genAI.

No one’s getting it right

Since there’s already distrust toward AI, brands producing and advertising AI-powered products have an uphill battle ahead. Consumers need to be convinced of AI’s benefits in a particular product, Gursoy said: “Many people question, Why do I need AI in my coffee maker, or why do I need AI in my refrigerator or my vacuum cleaner?”

The only problem is that no company has been able to successfully tap into this strategy, he argued.

“Companies are not doing a great job of that kind of messaging,” Gursoy said. “Everyone is keeping the AI development or what's going on with AI a secret, and that's understandable. But consumers also need to know that their data is safe.”

In order for consumers to purchase items espousing the utility of AI, brands need to first assuage anxieties around the technology. That means companies spelling out the benefits of a product thanks to AI and increasing transparency practices around data usage.

“There are always people who will never want that,” Gursoy said. “But for a large portion of consumers, we need to nudge their mind.”

 - NY Times