FTC Alleges Deceptive Practices by AI Search Engine

Illustration of one of the websites managed by the firm Just Answer.

An AI-driven search tool called Pearl touts its unique service by providing responses initially generated by a sophisticated language model, followed by further inquiry and verification by human agents.

However, a legal action initiated by the Federal Trade Commission this week claims a significant issue exists: The services purportedly trap users into recurring, unwanted charges that impact hundreds of thousands, an act federal authorities describe as 'widespread consumer fraud.'

Federal investigators explain the operation works as follows. A user clicking on an internet advertisement related to their search finds themselves on one of several landing sites managed by the company. Domain names include JustAnswer.com, AskWomensHealth.com, AskALawyer.com, and Pearl.com among numerous others.

Afterward, an assistant bot named Pearl collects more information concerning the user’s inquiry before directing the user to a membership form for JustAnswer’s Q&A service offered for $1 or $5. When users provide their credit card details, the company reportedly begins charging them excessively, according to federal allegations.

Controversial Subscription Charges

Federal regulators note that consumers are charged both the small initial fee and a much higher monthly subscription cost directly at the time of registration. This ongoing fee, potentially rising to $79 monthly, persists until users cancel their subscription, with cancellation terms obscurely disclosed in fine print near a prominent 'Confirm now' button.

The process reportedly deceived a large number of consumers, provoking numerous complaints alleging deceptive practices by the company.

Company Response and Legal Implications

CEO Andy Kurtzig of JustAnswer is accused of being aware of these deceptive practices and taking no remedial action, as claimed by the lawsuit.

In response to the lawsuit, a JustAnswer representative stated the company’s disappointment, citing ongoing engagement with the FTC over several years.

According to JustAnswer spokesperson Ashe Reardon, their membership fees and service model are transparently communicated, and customers can cancel easily through multiple channels such as a toll-free hotline, online chat, email, or directly on the website.

The legal action claims JustAnswer breached federal consumer protection statutes, seeking to restrain the company's operations through a court order.

The Issue of Dark Patterns

JustAnswer, reportedly employing approximately 700 employees and having secured nearly $50 million, allegedly uses tactics classified as 'dark patterns,' which are manipulative design strategies meant to mislead users into purchasing and retaining services.

Lina Khan, the former FTC Chair who initiated the investigation into JustAnswer, criticized such corporate conduct, noting similar actions had been taken against major companies like Amazon for employing dark patterns in subscription services.

Law scholar Lior Strahilevitz from University of Chicago highlights the continuous issue of consumers missing crucial fine print online, emphasizing the FTC's role in targeting companies using illegal dark patterns, which, while profitable, exploit consumer oversight.