Notice2024-22400
DoNotPay, Inc..; Analysis of Proposed Consent Order To Aid Public Comment
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Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
September 30, 2024
Issuing agencies
Federal Trade Commission
Abstract
The consent agreement in this matter settles alleged violations of federal law prohibiting unfair or deceptive acts or practices. The attached Analysis of Proposed Consent Order to Aid Public Comment describes both the allegations in the complaint and the terms of the consent order--embodied in the consent agreement--that would settle these allegations.
Full Text
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<title>Federal Register, Volume 89 Issue 189 (Monday, September 30, 2024)</title>
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[Federal Register Volume 89, Number 189 (Monday, September 30, 2024)]
[Notices]
[Pages 79594-79596]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-22400]
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FEDERAL TRADE COMMISSION
[File No. 232 3042]
DoNotPay, Inc..; Analysis of Proposed Consent Order To Aid Public
Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreement; request for comment.
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SUMMARY: The consent agreement in this matter settles alleged
violations of federal law prohibiting unfair or deceptive acts or
practices. The attached Analysis of Proposed Consent Order to Aid
Public Comment describes both the allegations in the complaint and the
terms of the consent order--embodied in the consent agreement--that
would settle these allegations.
DATES: Comments must be received on or before October 30, 2024.
ADDRESSES: Interested parties may file comments online or on paper by
following the instructions in the Request for Comment part of the
SUPPLEMENTARY INFORMATION section below. Please write ``DoNotPay, Inc.;
File No. 232 3042'' on your comment and file your comment online at
<a href="https://www.regulations.gov">https://www.regulations.gov</a> by following the instructions on the web-
based form. If you prefer to file your comment on paper, please mail
your comment to the following address: Federal Trade Commission, Office
of the Secretary, 600 Pennsylvania Avenue NW, Mail Stop H-144 (Annex
D), Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT: Keith Fentonmiller (202-326-2775),
Attorney, Division of Advertising Practices, Bureau of Consumer
Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW,
Washington, DC 20580.
SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule Sec. 2.34, 16 CFR
2.34, notice is hereby given that the above-captioned consent agreement
containing a consent order to cease and desist, having been filed with
and accepted, subject to final approval, by the Commission, has been
placed on the public record for a period of 30 days. The following
Analysis to Aid Public Comment describes the terms of the consent
agreement and the allegations in the complaint. An electronic copy of
the full text of the consent agreement package can be obtained at
<a href="https://www.ftc.gov/news-events/commission-actions">https://www.ftc.gov/news-events/commission-actions</a>.
You can file a comment online or on paper. For the Commission to
consider your comment, we must receive it on or before October 30,
2024. Write ``DoNotPay, Inc.; File No. 232 3042'' on your comment. Your
comment--including your name and your state--will be placed on the
public record of this proceeding, including, to the extent practicable,
on the <a href="https://www.regulations.gov">https://www.regulations.gov</a> website.
Because of heightened security screening, postal mail addressed to
the Commission will be subject to delay. We strongly encourage you to
submit your comments online through the <a href="https://www.regulations.gov">https://www.regulations.gov</a>
website. If you prefer to file your comment on paper, write ``DoNotPay,
Inc.; File No. 232 3042'' on your comment and on the envelope, and mail
your comment to the following address: Federal Trade Commission, Office
of the Secretary, 600 Pennsylvania Avenue NW, Mail Stop H-144 (Annex
D), Washington, DC 20580.
Because your comment will be placed on the publicly accessible
website at <a href="https://www.regulations.gov">https://www.regulations.gov</a>, you are solely responsible for
making sure your comment does not include any sensitive or confidential
information. In particular, your comment should not include sensitive
personal information, such as your or anyone else's Social Security
number; date of birth; driver's license number or other state
identification number, or foreign country equivalent; passport number;
financial account number; or credit or debit card number. You are also
solely responsible for making sure your comment does not include
sensitive health information, such as medical records or other
individually identifiable health information. In addition, your comment
should not include any ``trade secret or any commercial or financial
information which . . . is privileged or confidential''--as provided by
Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule Sec.
4.10(a)(2), 16 CFR 4.10(a)(2)--including competitively sensitive
information such as costs, sales statistics, inventories, formulas,
patterns, devices, manufacturing processes, or customer names.
Comments containing material for which confidential treatment is
requested must be filed in paper form, must be clearly labeled
``Confidential,'' and must comply with FTC Rule Sec. 4.9(c). In
particular, the written request for confidential treatment that
accompanies the comment must include the factual and legal basis for
the request and must identify the specific portions of the comment to
be withheld from the public record. See FTC Rule Sec. 4.9(c). Your
comment will be kept confidential only if the General Counsel grants
your request in accordance with the law and the public interest. Once
your comment has been posted on the <a href="https://www.regulations.gov">https://www.regulations.gov</a>
website--as legally required by FTC Rule Sec. 4.9(b)--we cannot redact
or remove your comment from that website, unless you submit a
confidentiality request that meets the requirements for such treatment
under FTC Rule Sec. 4.9(c), and the General Counsel grants that
request.
Visit the FTC website at <a href="https://www.ftc.gov">https://www.ftc.gov</a> to read this document
and the news release describing the proposed settlement. The FTC Act
and other laws the Commission administers permit the collection of
public comments to consider and use in this proceeding, as appropriate.
The Commission will consider all timely and responsive public comments
it receives on or before October 30, 2024. For information on the
Commission's privacy policy, including routine uses permitted by the
Privacy Act, see <a href="https://www.ftc.gov/site-information/privacy-policy">https://www.ftc.gov/site-information/privacy-policy</a>.
Analysis of Proposed Consent Order To Aid Public Comment
The Federal Trade Commission (``Commission'') has accepted, subject
to final approval, an agreement containing a consent order from
DoNotPay, Inc. (``DoNotPay'').
The proposed consent order (``proposed order'') has been placed on
the public record for thirty days for receipt of comments by interested
persons. Comments received during this period will become part of the
public record. After thirty days, the Commission will again review the
agreement and the comments received and will decide whether it should
withdraw from the agreement and take appropriate action or make final
the agreement's proposed order.
This matter involves DoNotPay's reliance on the emergence of new
technology like artificial intelligence
[[Page 79595]]
(AI) to market its DoNotPay Service (``the Service'') as a cutting-edge
solution for producing legal documents. DoNotPay described its Service
as ``the world's first robot lawyer'' and as an ``AI lawyer'' capable
of performing legal services such as drafting ``ironclad'' demand
letters, contracts, complaints for small claims court; challenging
speeding tickets; and appealing parking tickets. The proposed complaint
alleges that the Service was not designed to operate like a human
lawyer, and that the company's claims were false, misleading, or
unsubstantiated.
The proposed complaint also alleges that DoNotPay falsely claimed
that the Service used artificial intelligence and other technology to
analyze a consumer's small business website for federal and state law
violations and could save a consumer hundreds of thousands of dollars
in potential legal fees. Further, the proposed complaint alleges that
DoNotPay falsely claimed that the General Membership subscription to
the DoNotPay Service included some features that, in fact, were not
available to General Membership subscribers.
The proposed order contains provisions designed to prevent DoNotPay
from engaging in these and similar acts and practices in the future.
Provision I prohibits DoNotPay from representing that its Service or
any other internet-enabled product or service that it offers operates
like a human lawyer or any other type of professional, unless that
representation is not misleading and DoNotPay possesses competent and
reliable evidence to substantiate the representation. Provision II
prohibits DoNotPay from misrepresenting that its Service or any other
internet-enabled product or service is capable of analyzing or
evaluating a website or any other document for federal and state law
violations or will save consumers legal fees. This provision also
prohibits misrepresentations about the features, benefits, or
attributes included with the purchase of, or subscription to, any such
product or service.
Provisions III requires DoNotPay to pay the Commission $193,000 in
monetary relief. Provision IV describes the procedures and legal rights
related to that payment. Provision V requires DoNotPay to provide the
Commission customer contact information upon request in order to
administer consumer redress. Provision VI requires DoNotPay to provide
eligible customers with notice of the consent order and the settlement.
Provisions VII through XI are reporting and compliance provisions.
Provision VII mandates that DoNotPay acknowledge receipt of the order,
distribute the order to principals, officers, and certain employees and
agents, and obtain signed acknowledgements from them. Provision VIII
requires DoNotPay to submit compliance reports to the Commission one
year after the order's issuance and submit notifications when certain
events occur. Under Provision IX, DoNotPay must create certain records
for 10 years and retain them for five years. Provision X requires
DoNotPay to provide information or documents necessary for the
Commission to monitor compliance with the order during the period of
the order's effective dates. Finally, Provision XI provides the
effective dates of the order, including that, with exceptions, the
order will terminate in 20 years.
The purpose of this analysis is to facilitate public comment on the
proposed order. It is not intended to constitute an official
interpretation of the complaint or proposed order, or to modify in any
way the proposed order's terms.
By direction of the Commission.
Joel Christie,
Acting Secretary.
Concurring Statement of Commissioner Melissa Holyoak, Joined by Chair
Lina M. Khan
The Commission votes today to accept for public comment an
administrative complaint and consent agreement with DoNotPay, Inc.,
resolving allegations that the company made false and unsubstantiated
claims that its artificial intelligence (``AI'')-powered service could
function like a human lawyer; that its service could analyze a business
website for law violations based solely on the business's email
address; and that some legal services were available as part of its
general membership when in fact they were not.
For consumers to benefit from AI (as with any technology), they
must be able to trust the claims that companies make about its
capabilities. Importantly, this settlement does not suggest that
consumers should use expensive professional services, or that companies
should avoid offering innovative products that reduce the need for
high-priced lawyers.\1\ The misdeeds of a few bad apples shouldn't
dampen pro-consumer innovation. Indeed, we are hopeful that AI will
give consumers access to many types of services at lower cost and with
greater convenience than has previously been available. Today's
settlement shows the Commission's important role in eliminating
deception from the market so that honest firms can compete to offer
consumers innovative, trustworthy products.
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\1\ Cf. Sandbox Information for Interested Applicants, Utah
Office of Legal Services Innovation, <a href="https://utahinnovationoffice.org/info-for-interested-applicants/">https://utahinnovationoffice.org/info-for-interested-applicants/</a> (last
visited Sept. 12, 2024) (describing Utah's ``legal regulatory
sandbox,'' which ``enables authorized entities to employ innovative
legal service methods and business models . . . to ensure consumers
have access to a well-developed, high-quality, innovative,
affordable and competitive market for legal services'').
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Concurring Statement of Commissioner Andrew N. Ferguson
The Commission today issues an administrative complaint and accepts
a proposed consent agreement with DoNotPay for deceptively marketing a
generative artificial intelligence (AI) system.\1\ The Commission's
complaint alleges that DoNotPay advertised its service as ``the world's
first robot lawyer'' that could ``fight corporations, beat bureaucracy
and sue anyone at the press of a button.'' \2\ DoNotPay told consumers
it could ``Generate Perfectly Valid Legal Documents in No Time'' and
guide consumers through filing a lawsuit.\3\ The DoNotPay website
prominently featured a quote that it claimed was from the Los Angeles
Times: ``What this robot lawyer can do is astonishingly similar--if not
more--to what human lawyers do.'' \4\ But this quote was actually from
a high-school student's opinion piece in the High School Insider
website, a blog hosted by the Los Angeles Times for young people.\5\
DoNotPay told consumers that ``[w]hile it is possible to handle suing
for assault on your own, it may not be the best approach'' and advised
them that ``it is easier to have the expertise of an entity such as
DoNotPay on your side to avoid complications.'' \6\ The Commission's
complaint alleges that DoNotPay fell far short of these promises, and
that DoNotPay employees had not even tested the quality and accuracy of
the legal documents and advice generated by the service.\7\ In some
cases, the Commission alleges that DoNotPay advertised features that it
simply did not provide.\8\
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\1\ In re DoNotPay, Inc., Complaint (``Complaint'') & Decision
and Order.
\2\ Complaint ] 9.
\3\ Id. ] 17.
\4\ Id. ] 10.
\5\ Id. ] 11.
\6\ Id. ] 17.
\7\ Id. ] 20.
\8\ Id. ] 24.
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I am happy to vote for this complaint. It is a great example of the
Commission enforcing Section 5 of the Federal Trade
[[Page 79596]]
Commission Act \9\ against businesses that deceive consumers about the
capabilities of their generative AI services. Businesses that exploit
media hype and consumer unfamiliarity with this new technology to cheat
people out of their hard-earned money should expect a knock on the door
from the Commission and other law-enforcement agencies. In this case,
consumers who relied on DoNotPay's wholly inadequate legal advice not
only wasted their money but were also likely induced into reliance on
the inadequate legal contracts and ineffective legal filings generated
by DoNotPay. It does not take a vivid imagination to imagine how such
reliance could have ruinous consequences. The Commission's staff
deserves great credit for bringing and settling this case.
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\9\ 15 U.S.C. 45.
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I write separately to ensure that no one confuses what we are doing
today--holding generative-AI companies to the same standards for
honest-business conduct that apply to every industry--with the
regulation of AI qua AI. Congress has given us the power to enforce
prohibitions against unfair methods of competition and unfair or
deceptive acts and practices.\10\ We may reach some AI-related activity
incidental to enforcing those prohibitions, as we do today. But
Congress has not given us power to regulate AI standing alone. We
should not succumb to the panicked calls for the Commission to act as
the country's comprehensive AI regulator.\11\
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\10\ Id. 45(a)(2).
\11\ See Dissenting Statement of Commissioner Andrew N.
Ferguson, Joined by Commissioner Melissa Holyoak, In the Matter of
Rytr LLC, at 9-10 (Sept. 25, 2024); Concurring and Dissenting
Statement of Commissioner Andrew N. Ferguson, A Look Behind the
Screens: Examining the Data Practices of Social Media and Video
Streaming Services, at 10-11 (Sept. 19, 2024).
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I write also to clarify that my vote should not be taken as support
for the State Bar of California's claim that DoNotPay was engaged in
the unauthorized practice of law.\12\ The Commission does not enforce
state occupational-licensing laws like California's unauthorized-
practice-of-law prohibition.\13\ And if a company were to create a
computer system capable of giving accurate legal advice and drafting
effective legal documents, or honestly advertise a system that provides
something less, I doubt that the aggressive enforcement of lawyers'
monopoly on legal services would serve the public interest.
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\12\ Complaint ]] 25-27.
\13\ See Cal. Bus. & Prof. Code Sec. 6125.
[FR Doc. 2024-22400 Filed 9-27-24; 8:45 am]
BILLING CODE 6750-01-P
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