The maker of a weapons detection system used by several North Carolina school districts overpromised what its product could do, the Federal Trade Commission says, and a new settlement with the company enables some districts to get out of their contracts.
Evolv Technologies Inc. settled with the FTC this week after the regulator alleged that the Waltham, Massachusetts-based company used misleading tactics when marketing its Evolv Express system, which uses artificial intelligence to detect weapons.
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Johnston, Edgecombe, Nash-Rocky Mount, Person, Harnett, Guilford, Charlotte-Mecklenburg and Onslow are among the North Carolina school districts that have contracts with Evolv. Some are now eligible to cancel them.
Evolv, in a statement about the settlement, emphasized that the FTC wasn’t challenging the effectiveness of the company’s core technology.
“Our top priority is the safety of people and the communities we serve,” Mike Ellenbogen, interim CEO of Evolv Technologies, said in the statement. “To be clear, this inquiry was about past marketing language and not our system’s ability to add value to security operations.”
It was unclear late Friday whether any of the affected North Carolina districts would seek to cancel their contracts, or which ones would be eligible.
Some area school districts, such as Johnston County Schools, likely won’t qualify for the terms of the settlement based on the number of Express devices they purchased.
Charlotte-Mecklenburg Schools also won’t qualify, spokeswoman Susan Vernon-Devlin said. The district is aware of the settlement, but she said it “does not have any impact on our multi-layered approach to security.”
Other school districts didn’t respond to WRAL’s requests for comment.
Evolv Express products are commonly installed at schools and sporting events and serve the purpose of a metal detector but function differently. The devices use AI-powered scanners to detect weapons — not metal — as people walk through them. The company billed the system as a quicker and less manpower-intensive approach to security.
Schools and other private companies have gravitated toward the product as concerns over random acts of mass violence in public spaces have grown for years in the United States.
The FTC — which enforces consumer protection laws that prevent deception and unfair business practices — alleged that Evolv had said its technology could do things that it couldn’t and that the company knew the statements weren’t accurate — including purported claims that the technology could detect every type of weapon while also ignoring harmless personal items. The agency alleged that the technology was unable to detect all weapons and said its most sensitive setting set off high rates of false alarms. That reality also undermined claims that the Express devices would require less manpower than traditional metal detectors, because false alarms triggered manual searches, the agency said.
To reduce false alarms, the company in 2023 began telling schools to have students walk through the Express scanners without their “personal items,” according to the regulator.
“The FTC has been clear that claims about technology — including artificial intelligence — need to be backed up, and that is especially important when these claims involve the safety of children,” Samuel Levine, the director of the FTC’s Bureau of Consumer Protection, said in a statement announcing the settlement.
The Express devices have caught numerous weapons and helped make schools safer, the company says.
Some tests conducted in 2021 and 2022 have found the Express systems didn’t pick up on all knives and other weapons. A knife got through successfully in a Utica, New York, school and was used in a stabbing, according to the agency.
Evolv has said earlier tests don’t reflect improvements in the company’s technology. The company uses various technologies to collect data on an object and artificial intelligence is designed to flag it as a person walks through.
WRAL Investigates tested various weapons and things that look like weapons in a machine earlier this year, on just one sensitivity level. The machine flagged 75% of all items and 90% of objects that could be used as weapons.
Schools that signed contracts with Evolv between April 1, 2022, and June 30, 2023, can cancel them, and they must do so within 60 days of being notified that they are entitled to cancel. Schools aren’t eligible if they did a pilot program, bought 15 or more Express devices or bought more Express devices 45 days after their original purchase. It’s likely many of the North Carolina systems won’t qualify; the company estimates just 4% of its installed Express units would be eligible.
The settlement is the latest legal hurdle for Evolv, a company that has quickly captured a share of the market for mass gathering spaces, especially K-12 schools. The company has faced criticism for several years over the effectiveness of its products.
In March, a group of Evolv investors sued the company, alleging it overstated how well the machines worked.
In October, the company cautioned investors to disregard nearly two years of financial statements figures while the company hired outside investigators to probe potential sales misconduct. Evolv said it self-reported the financial reporting issue to the U.S. Securities and Exchange Commission, which at the time was investigating the company on an unrelated matter. The SEC regulates publicly traded companies such as Evolv.
Days after the internal probe was announced, the company terminated its chief executive and installed an interim CEO.
The company’s internal investigation found that it prematurely or incorrectly booked millions of dollars in revenue, Evolv said last month. The company said it expected to report a material weakness in its internal controls over financial reporting.
“The fundamentals of our business remain strong,” Evolv’s board said in announcing the internal probe. “We are seeing demand for our products and services that is in line with our internal forecasts and consistent with our long-term expectations.”
The company’s share price plummeted after news of the internal probe in October, but it has rebounded in recent weeks. Overall, its share price has fallen about 10% since the start of the year, closing at $4.29 Friday after regular trading on the Nasdaq. The S&P 500, which is used as a broader market indicator, has increased about 28% this year.