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FBA Machine
The FTC took action against a business opportunity scheme that allegedly falsely promised consumers that they would make guaranteed income through online storefronts that utilized AI-powered software. According to the FTC, the scheme, which has operated under the names Passive Scaling and FBA Machine, cost consumers more than $15.9 million based on deceptive earnings claims that rarely, if ever, materialize.
As a result of the FTC’s complaint, a federal court issued an order temporarily halting the scheme and putting it under the control of a receiver. The case against the scheme is still under way and will be decided by a federal court.
Rytr LLC, In the Matter of
According to the FTC’s complaint, Rytr’s service generated detailed reviews that contained specific, often material details that had no relation to the user’s input, and these reviews almost certainly would be false for the users who copied them and published them online. In many cases, subscribers’ AI-generated reviews featured information that would deceive potential consumers who were using the reviews to make purchasing decisions. The complaint further alleges that at least some of Rytr’s subscribers used the service to produce hundreds, and in some cases tens of thousands, of reviews potentially containing false information.
The proposed order settling the Commission’s complaint is designed to prevent Rytr from engaging in similar illegal conduct in the future. It would bar the company from advertising, promoting, marketing, or selling any service dedicated to – or promoted as – generating consumer reviews or testimonials.
DoNotPay
The FTC is taking action against DoNotPay, a company that claimed to offer an AI service that was “the world’s first robot lawyer,” but the product failed to live up to its lofty claims that the service could substitute for the expertise of a human lawyer.
DoNotPay has agreed to a proposed Commission order settling the charges against it. The settlement would require it to pay $193,000, provide a notice to consumers who subscribed to the service between 2021 and 2023 warning them about the limitations of law-related features on the service. The proposed order also will prohibit the company from making claims about its ability to substitute for any professional service without evidence to back it up.
In January, 2025, the Commission finalized an order requiring DoNotPay to stop making deceptive claims about the abilities of its AI chatbot.
Concurring Statement of Commissioner Melissa Holyoak, Joined by Chair Lina M. Khan In the Matter of DoNotPay, Inc.
FTC Takes Action Against Invitation Homes for Deceiving Renters, Charging Junk Fees, Withholding Security Deposits, and Employing Unfair Eviction Practices
FTC Presents Criminal Liaison Unit Award to USPIS Postal Inspector Kathy Broderick
CarShield
In July 2024, NRRM, LLC, which does business as CarShield, along with American Auto Shield, LLC, the administrator of its vehicle service contracts, agreed to pay $10 million to settle FTC charges that its advertisements and telemarketing for VSC are deceptive and misleading, and that many purchasers found that many repairs were not “covered,” despite making payments of up to $120 per month. The FTC also alleges CarShield’s celebrity and consumer endorsers made false statements in its ads.
FTC Staff Report Finds Large Social Media and Video Streaming Companies Have Engaged in Vast Surveillance of Users with Lax Privacy Controls and Inadequate Safeguards for Kids and Teens
Statement of Chair Lina M. Khan Regarding the Social Media and Video Streaming Service Providers Privacy Report
FTC Action Leads to Settlement Against Individual and Company that Operated Business Opportunity Scheme That Took Millions from Consumers
FTC Sends Refunds to Consumers Harmed by CafePress’s Data Security Failures
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