11:09 AM EST, 11/26/2024 (MT Newswires) -- Evolv Technologies ( EVLV ) stock was mercurial on Tuesday after federal regulators said they were taking action its alleged false claims of artificial intelligence-powered security screening system could detect weapons in school settings, while ignoring harmless personal items.

Under terms of a proposed settlement order with the Federal Trade Commission, Evolv ( EVLV ) would be banned from making unsupported claims about the ability of its products to detect weapons by using AI .

The company will also give selected K-12 school customers the option to cancel their multi-year contracts, FTC said.

Evolv Technologies ( EVLV ) shares dropped as much as 16% before recovering to a 0.14% gain recently.