How ‘Free’ AI Tools Put Your Business at Risk

AI-powered tools have become essential in modern workflows, offering automation and convenience. Free AI note-taking apps, in particular, are gaining traction among individuals and businesses looking to simplify documentation. While these free AI tools may seem like a smart shortcut, they often come with hidden risks, especially when it comes to security and compliance. 

A staggering 99% of organizations are unknowingly exposing sensitive data through uncontrolled AI tools, often due to “shadow AI” usage—tools deployed without formal approval or governance. Use of AI tools without IT or legal oversight can create gaps in your company’s defense for bad actors to take advantage of. 

It’s important to remember that in technology, nothing is truly free. AI systems require substantial resources—compute power, cooling, and ongoing maintenance—all of which come at a cost. Many free platforms offset these expenses by monetizing your data, often using it to train their models or selling it to third parties.

This is why Catalyst IT does not recommend using free tools like ChatGPT, Otter.ai, or Read.ai for organizational work. Most lack the necessary safeguards to protect sensitive data and do not guarantee that your information remains within your organization. In many cases, they reserve the right to use your data, including voice recordings, transcripts, and meeting metadata for their own purposes.

Let’s break down the key concerns and what you should consider before integrating AI solutions into your operations. 

Security & Privacy Risks of Free AI Tools 

Potential for Infringement on IP and Consent 

Free AI tools often operate with broad training datasets and minimal user safeguards, which can lead to serious risks around intellectual property (IP) and data consent. These tools may: 

• Generate content that closely resembles copyrighted material 
• Reuse user inputs without explicit permission 
• Incorporate proprietary or sensitive data into future model training 

This creates a gray area where your business could unintentionally publish infringing content or expose client data without proper consent. Unlike enterprise-grade platforms, free tools rarely offer opt-out mechanisms, data isolation, or clear licensing terms for generated outputs. 

Why it matters: Using free AI tools without understanding their data handling policies could put your company at risk of legal disputes, compliance violations, or brand damage. 

71.7% of AI tools used in corporate environments are classified as high or critical risk. This highlights the widespread use of potentially unsafe AI tools in business settings, often without proper oversight or compliance checks. 

Weak Data Protection 

Many free tools lack: 

• Strong encryption protocols
• Secure data storage practices
• Protection against unauthorized access

Free AI tools often use your transcriptions to improve their models, which can lead to confidential conversations being stored, shared, or accessed by unauthorized parties. Without explicit consent, this may result in privacy violations and exposure of sensitive data like financial records, personal identifiers, or proprietary business information, potentially breaching compliance standards. 

Downloading AI-generated content or entering personal info into free tools may seem harmless, but it can open the door to phishing, malware, or data theft. Some sites posing as AI services can be decoys designed to infect your system and compromise sensitive information, a modern-day Trojan Horse. 

Trust with AI tools is growing: 34.8% of imported data from corporate employees in AI tools is sensitive data. Do you want that sensitive data protected by a secure platform or in the wind with a free tool? 

Otter.ai is currently facing a class-action lawsuit for violating federal and state privacy laws, including the Electronic Communications Privacy Act and California’s wiretap laws.

What Businesses Should Do Instead 

In the AI race, it’s typically best to stick with the name-brands. Choose established, enterprise-grade solutions like the following: 

Please note: While AI tools offer powerful capabilities, they may still produce inaccurate, biased, or ethically questionable outputs. Always verify critical information and use human judgment when making decisions. 

The benefits of choosing an enterprise-level AI tool include, but are not limited to: stronger security protocols, clear privacy agreements, and compliance with industry standards. 

It is crucial to understand that AI may be able to complete extremely complex and lengthy tasks someday very soon, but not quite today. If you’ve noticed performance drops or increasing errors as tasks progress, you’re not alone:

METR found that current models have a near 100% success rate on tasks that take humans less than 4 minutes, a 50% success rate on task lengths of 50 minutes, and less than 10% success rate on task lengths of 4 hours. The shorter the task and volume of output, the better it will perform. 

A joint study by MIT, Harvard, and Cambridge also revealed that 91% of machine learning models degrade over time, especially when exposed to new or evolving data.  

AI systems are best used for short and simple tasks like: 

• Summarizing documents 
• Data cleanup and formatting 
• Quick research 
• Brainstorming and idea generation 
• Identifying duplicate entries or anomalies in spreadsheets 

Final Thoughts 

Free AI solutions may offer convenience, but they often come at the cost of security, privacy, and compliance. Businesses must weigh these risks carefully. As the saying goes: you get what you pay for.  

Investing in secure, professional-grade tools is not just a smart move, it’s a necessary one. But it can also be overwhelming.

Choose Century Business Products & Catalyst IT’s Managed IT Services for expert guidance in choosing the right AI tools for your business!