FTC

DOJ said current laws are sufficient to prosecute child sexual abuse material (CSAM) crimes, including AI-generated deep fakes, a federal prosecutor said Wednesday.

President Joe Biden signed off Thursday on a continuing resolution (HR-9747) that maintains funding for the FCC, FTC, Commerce Department agencies and all other federal entities through Dec. 20 after both chambers swiftly cleared the measure. HR-9747’s enactment averts a government shutdown that would have otherwise begun when FY 2024 funding expires Monday night. The Senate voted 78-18 for the CR Wednesday night, mirroring the House’s similarly lopsided approval earlier in the day (see 2409250036). Congress’ approval of HR-9747 gives lawmakers “more time to pass full-year funding bills by the end of this year,” Biden said Wednesday night. The Senate also approved the Rural Broadband Protection Act (S-275) Wednesday night by unanimous consent. The measure, which the Senate Commerce Committee advanced in late July (see 2407310048), would require that the FCC launch a rulemaking to change vetting rules for USF high-cost applicant ISPs. S-275 lead sponsor Sen. Shelley Moore Capito, R-W.Va., hailed Senate passage of the measure. “By verifying that providers can actually deliver on the promises made to bring high-speed internet to specific areas, we can maximize the influx of broadband dollars coming to West Virginia and move toward our goal of closing the digital divide in communities of all sizes across our state,” she said: “I encourage my House colleagues to pass this important legislation quickly.”

The FTC on Wednesday announced enforcement action against five companies it said engaged in AI-driven deception online. Action against one of the companies resulted in a monetary settlement, and three of the cases are ongoing. Republican Commissioners Andrew Ferguson and Melissa Holyoak voted against filing one of the complaints. The other four complaints were filed through 5-0 votes. DoNotPay agreed to settle for $193,000 over claims against its “robot lawyer” service. The company’s “product failed to live up to its lofty claims that the service could substitute for the expertise of a human lawyer,” the agency said. Republicans voted against filing a claim against Rytr. The agency said the company violated the FTC Act by providing subscribers with tools to “generate false and deceptive written content for consumer reviews.” Rytr agreed to a nonmonetary settlement barring the company from engaging in similar behavior in the future. Holyoak in a dissenting statement noted the complaint doesn’t allege any of the company’s customers actually “posted any draft reviews” online. Ferguson said: “Treating as categorically illegal a generative AI tool merely because of the possibility that someone might use it for fraud is inconsistent with our precedents and common sense. And it threatens to turn honest innovators into lawbreakers.” The agency announced ongoing litigation against three of the companies whose business schemes have been blocked in federal court. The FTC is suing Ascend Ecom, a company the agency said falsely claimed to offer AI tools that deliver customers thousands of dollars a month in passive income on e-commerce platforms like Amazon. The complaint alleges the company cheated consumers out of at least $25 million since 2021. The FTC is suing Ecommerce Empire Builders for similar allegations. The company promised consumers thousands of dollars in monthly income from online storefronts. A separate lawsuit against FBA Machine alleges it cheated consumers out of more than $15.9 million offering services promising guaranteed income from online storefronts.

The House voted 341-82 Wednesday to pass a continuing resolution (HR-9747) that would maintain funding through Dec. 20 for the FCC, FTC, Commerce Department agencies and all other federal entities. The resolution's passage would avert a government shutdown that would otherwise begin after FY 2024 funding expires Monday. The Senate was expected to take up the measure Wednesday night. “It would be political malpractice to shut the government down” just weeks before the Nov. 5 presidential election, House Speaker Mike Johnson, R-La., told reporters. “I think everyone understands that.”

Sen. Ed Markey, D-Mass., on Tuesday introduced legislation that would impose civil penalties on companies offering AI services that violate a consumer's civil rights. The legislation authorizes the FTC, state attorneys general and individual consumers to enforce the law’s provisions. The bill applies to algorithms and other technology responsible for “consequential decisions” that affect employment, banking, health care, criminal justice, public accommodation and government services. States can seek civil penalties up to $15,000 per violation, or 4% of a company’s average gross annual revenue over the preceding three years, whichever is greater. Markey introduced the AI Civil Rights Act with Sen. Mazie Hirono, D-Hawaii.

House leaders will likely take up kids’ privacy legislation, but not before more legislative work is done on the House Commerce Committee-passed bills, a high-ranking Senate Commerce Committee staffer said Wednesday.

Tech companies are buying small AI startups without antitrust scrutiny, which could have long-term, negative impacts on consumers, Public Knowledge said Monday in comments to the FTC and DOJ. Tech associations argued empirical evidence shows there aren’t competition concerns in the sector and said antitrust enforcers should rely on statistics, not conjecture. DOJ and the FTC on Friday closed public comment on their inquiry into “serial acquisitions and roll-up strategies” that they believe harm competition. Public Knowledge, in joint comments with the Responsible Online Commerce Coalition, cited the strategic investment of companies like Microsoft, Google and Amazon. Companies in recent years have purchased hundreds of small tech startups, including those offering AI services, and the deals are so small they often don’t trigger antitrust review. “This has allowed Big Tech to shape numerous digital markets and expand their dominance unchallenged,” said PK. Tech companies already enjoy dominant positions in their respective markets, but purchasing AI companies further entrenches their dominance, said PK: “The lack of competition in technology ecosystems can lead to stagnation in innovation and service improvement and presents significant hurdles for consumers seeking to explore different products.” The Computer & Communications Industry Association said in comments that enforcers failed to show “how and why these business strategies raise particular competitive concerns.” The agencies’ annual Hart-Scott-Rodino report for fiscal 2022 showed enforcers don’t identify competition concerns in “most notified mergers.” The agencies requested additional information on 47 of the 3,029 notified merger transactions in the report, or fewer than 2% of the deals, said CCIA. NetChoice urged enforcers to keep their focus on “demonstrable consumer harm rather than abstract structural concerns or protection of competitors.” The association recommended the agencies rely on “grounded analysis in rigorous economic evidence rather than anecdotes or political considerations.”

Amazon, Meta, Google, TikTok and other companies should change their data “surveillance” practices to improve user privacy, the FTC said Thursday, concluding a probe the Trump administration started. The FTC issued a staff report with recommendations for nine companies that received orders in December 2020 (see 2012140054). Republican commissioners said in statements that some of the recommendations exceed the FTC’s authority. The report details how companies “harvest an enormous amount” of data and monetize it for billions of dollars annually, Chair Lina Khan said. “These surveillance practices can endanger people’s privacy, threaten their freedoms, and expose them to a host of harms.” The agency issued Section 6(b) orders to Amazon, Facebook, YouTube, X, Snap, ByteDance, Discord, Reddit and WhatsApp. Staff recommended data minimization practices, targeted advertising limits and more-stringent restrictions for children. The commission voted 5-0 to issue the report, but Commissioners Andrew Ferguson and Melissa Holyoak dissented in part. Ferguson argued that some of the FTC’s recommended actions for companies exceed agency authority: “We are not moral philosophers, business ethicists, or social commentators. ... [A]s Beltway bureaucrats, our opinion on these matters is probably worth less than the average American’s.” Some of the recommendations are “thinly-veiled threats,” he said. Ferguson cited the recommendation that companies not willfully ignore user age because it won’t “help companies avoid liability under” the Children’s Online Privacy Protection Act. Holyoak said some of the agency’s recommendations could chill online speech. For example, should a company follow recommendations to redesign algorithms for classes the agency deems “protected,” it could undermine the speech rights of certain populations. The report “fails to robustly explore the full consequences of its conclusions and recommendations,” she added. Khan in her statement denied the report “somehow endorses or encourages the platforms to disfavor certain viewpoints.” The report directly states that it doesn’t “address or endorse any attempt to censor or moderate content based on political views,” said Khan.

Statutory language in the 1991 Telephone Consumer Protection Act allowed the FCC to act against those responsible for illegal voice-cloning in the New Hampshire presidential primary election (see 2408210039), Chairwoman Jessica Rosenworcel said Wednesday.

The House Innovation Subcommittee plans a Sept. 19 hearing contrasting current and past FTC practices with an implied aim of criticizing Chair Lina Khan's role in the alleged changing of commission norms. Subpanel Republicans criticized Khan's actions during a July hearing focused on the FTC's FY 2025 budget request (see 2407090044). The Sept. 19 hearing will begin at 10:30 a.m. in 2322 Rayburn, the Commerce Committee said Thursday night. The FTC’s monthly meeting is set for 11 a.m. the same day. The commission “has a long, bipartisan history of protecting consumers, without unduly burdening legitimate business activity,” said House Commerce Chair Cathy McMorris Rodgers, R-Wash., and Innovation Chairman Gus Bilirakis, R-Fla. “Unfortunately, in recent years, we have seen the Commission take a different approach when it comes to its historical norms.” That perceived “shift raises questions on its preparation for rulemakings, its retention of staff, and the long-term impact on its effectiveness in sustaining court challenges,” the GOP leaders said: “We look forward to a conversation with experts on how the FTC’s departure from its traditional standards is affecting Americans in their daily lives, consumer safety, and American businesses across the country.”