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On July 1, the FTC announced a request for public comment on a proposed policy statement addressing the application of section 5 of the FTC Act to Artificial Intelligence (AI) systems. The proposed policy statement explains that AI companies may engage in deceptive practices if they make representations about an AI system’s accuracy, objectivity, or reliability while allegedly altering outputs in a manner inconsistent with those representations.
The proposed policy statement focuses on whether AI systems operate consistent with consumer expectations and representations made regarding their capabilities. According to the FTC, companies may create expectations that their AI systems are designed to provide outputs that accurately respond to user objectives, and that undisclosed changes affecting those outputs could raise concerns under Section 5. The policy statement noted that AI products and services remain subject to traditional consumer protection standards, including requirements that companies avoid misleading claims regarding the performance, effectiveness, and characteristics of AI tools. Companies can avoid potential violations by clearly disclosing when an AI system prioritizes objectives different from those users requested or would otherwise reasonably expect.
Putting It Into Practice: The proposed policy statement follows continued federal and state efforts to address the application of existing regulatory frameworks to AI technologies (previously discussed here and here). The FTC has also pursued enforcement actions against AI companies for allegedly deceptive practices, including claims regarding the accuracy and capabilities of AI products. Companies developing or deploying consumer-facing AI tools should review representations regarding AI capabilities, assess whether system functionality aligns with consumer-facing disclosures, and continue monitoring federal and state AI developments as regulators refine expectations for AI governance.
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