Tag: Consumer Protection

The FTC has filed a lawsuit against an online business opportunity scheme that it alleges has falsely claimed its “cutting edge” AI-powered tools would help consumers quickly earn thousands of dollars a month in passive income by opening online storefronts. According to the complaint, the scheme has defrauded consumers of at least $25 million.

According to the FTC’s complaint, the operators of the scheme charge consumers tens of thousands of dollars to start online stores on ecommerce platforms such as Amazon, Walmart, Etsy, and TikTok, while also requiring them to spend tens of thousands more on inventory. Ascend’s advertising content claimed the company was a leader in ecommerce, using proprietary software and artificial intelligence to maximize clients’ business success.

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.

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.