FTC accuses AI search engine of ‘rampant consumer deception’

A search engine powered by artificial intelligence known as Pearl promotes itself as a distinctive service. It offers up answers generated by a large language model then a human gets involved for follow-up questions and fact checking.

There’s just one problem, according to a lawsuit filed by the Federal Trade Commission on Tuesday: the company’s offerings are allegedly a ploy to lock consumers into recurring charges they don’t want, a scheme that ensnared hundreds of thousands of people and that federal regulators are calling “rampant consumer deception.”

Here’s how federal investigators say it worked. Someone browsing the web clicks on an ad related to their online search and arrives on one of a host of landing pages the company operates. Some of the domains include JustAnswer.com, AskWomensHealth.com, AskALawyer.com, Pearl.com and hundreds of others.

Then an assistant chatbot, known as Pearl, asks further questions about the search before sending the user a form to join the company’s question-and-answer service for either $1 or $5. Once credit card information is handed over, the company starts milking consumers, according to the federal complaint.

“JustAnswer charges consumers both the $1 or $5 join fee and a significantly higher monthly subscription fee immediately at sign-up,” according to the suit by federal regulators, which began investigating the company in 2022.

The unwanted monthly fees, which can be as high as $79, continue every month until consumers cancel — something that is revealed in fine print above a large orange button that says: “Confirm now.”

According to federal investigators, this process duped hundreds of thousands of consumers, which the suit says led to a flood of complaints describing the company’s “scammy” behavior.

The company’s CEO Andy Kurtzig was aware of the consumer deception and refused to make any changes, according to the suit.

In a statement, a JustAnswer spokesperson said it is “disappointed” with the lawsuit after having engaged with the FTC for nearly three years.

“We clearly publish our pricing and model upfront, and make cancelling simple and convenient through multiple channels, including a 24/7 toll-free number, live chat, email and with one click on the web,” said JustAnswer spokesman Ashe Reardon.

The suit alleges JustAnswer has violated federal consumer protection laws and seeks an injunction against the company.

JustAnswer has about 700 employees and has raised around $50 million, according to market intelligence firm PitchBook.

The alleged techniques are an example of what’s known as “dark patterns.” That’s the technical term used to describe companies tricking consumers into signing up for services and maintaining subscriptions.

Former FTC Chair Lina Khan, whose investigators started the probe into JustAnswer, railed against such corporate behavior. She brought similar actions against major tech firms, including Amazon, which the FTC said had deployed dark patterns to trick consumers into auto-renewing their Amazon Prime subscriptions.

Lior Strahilevitz at the University of Chicago Law School who studies dark patterns said the FTC’s case highlights the age-old issue of missing the fine print before a purchase, something that continues to be prevalent online.

“The FTC and state attorneys general sue companies that employ unlawful dark patterns pretty frequently,” Strahilevitz said. “Yet these dark patterns can be a really profitable way of ripping off consumers because some consumers won’t notice the charges or won’t seek refunds promptly.”