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Last update June 15, 2025
FTC Operation AI Comply Was a Wake-Up Call for New AI Regulations
Artificial intelligence (AI) is transforming the way we do business and interact with the world around us.
AI is also attracting increased scrutiny and FTC AI enforcement from the Federal Trade Commission (FTC).
FTC AI enforcement applies to:
* Regulation of deceptive and unfair advertising claims and practices, and
* Enforcement of laws and AI regulations protecting consumers.
This checklist breaks down how to protect yourself and your business from FTC AI enforcement using real examples from FTC cases.
Two Things Happen When You Advertise FTC AI
Your marketing message has more lift (your intended result). The FTC agrees: in its 2023 guidance, the FTC stated that AI is "a marketing term. Right now it's a hot one."
Your FTC compliance requirements suddenly become much more challenging.
Examples of Operation AI Comply Compliance Failures
The FTC has made it clear: if your ad, landing page, or sales webinar says your product is “powered by artificial intelligence,” you need to back that up with substantiation and a disclosure of material information (more on this below).
For example:
* “AI-powered compliance in 48 hours” was a key claim in the AccessiBe case; yet the software couldn't deliver compliance to legal standards.
* “AI-run ecommerce store” in the eCommerce Builders case turned out to be an undisclosed drop-shipping model with little AI functionality.
What is FTC AI Anyway?
In February 2023, the FTC raised this question publicly for the first time in its blog post “Keep your AI claims in Check”, concluding that it's an ambiguous term. The FTC further concluded one thing “for sure”...“it's a marketing term. Right now it's a hot one.”
Effective November 21, 2023, the FTC used the following definition of AI in its Resloution for the use of Compulsory Process with investigations of products and services relating to AI:
* Machine-based systems that can, for a given set of defined objectives,
* Make predictions, recommendations, or decisions,
* Influencing real or virtual environments, or
* That purport to use or detect the use of artificial intelligence.
Officially, the FTC Operation AI Comply launched with a press release dated September 25, 2024 titled: “FTC Announces Crackdown on Deceptive AI and Schemes.”
FTC AI (Bottom line): whether your product or service uses or incorporates what the FTC claims is AI, or you simply say it does, the FTC “crackdown” made it clear: if you market AI, you must comply.
Are You a Marketer, Advertiser or Agency?
If you market, advertise, or help promote a product or service that references AI, AI regulations apply to you.
Examples for how AI regulations may apply to marketing claims:
* Digital agencies writing AI-related ad copy;
* Marketers promising specific results based on AI;
* SaaS companies using AI tools or overlays;
* Influencers and affiliates promoting “AI-powered” solutions; and
* Course creators promising AI automation.
Ad agencies may also be liable for damages for deceptive AI marketing claims based on:
* The extent of the agency's “participation” in creating the ad; and
* Whether the agency “knew or should have known” that the ad contained deceptive claims.
Understand the Reasoning Behind the FTC Operation AI Comply (Big Losses for Consumers)
The FTC isn't theorizing about AI deception; it's actively bringing FTC AI enforcement against companies that make exaggerated or misleading AI-related promises.
Recent FTC AI enforcement actions show that the FTC is especially focused on:
* Overpromising automation and AI performance.
* Suggesting compliance or legal functionality without substantiation.
* Tying AI claims to guaranteed earnings or cost savings.
Below are five illustrative cases where the FTC cracked down on deceptive AI claims, including the results:
* FTC v. DK Automation (11-16-22): $2.6 million suspended judgment.
Promoted “automated” AI-driven Amazon stores with promises of passive income; failed to disclose risks or substantiate income claims.
* FTC v. WealthPress (1-11-23): $1.7 million settlement.
Included exaggerated claims that AI could predict stock trading outcomes, combined with deceptive testimonials and earnings claims.
* FTC v. eCommerce Empire Builders (9-18-24): $14.3 million alleged consumer harm.
Promised AI-powered ecommerce stores and earnings of $10K+/month; in reality, many consumers lost money and received little AI support.
* FTC v. AccessiBe (1-3-25): $1 million settlement.
Claimed its AI tool could make any website compliant with accessibility laws within 48 hours—claims were found to be false, unsubstantiated, and misleading.
* FTC v. DoNotPay (1-16-25): $193,000 settlement.
Marketed itself as the “world's first robot lawyer” without testing legal functionality or hiring lawyers to verify outputs.
These cases reflect FTC AI enforcement priorities. Whether you're selling compliance software, investment platforms, or eCommerce tools, compliance with AI regulations is now a top priority for FTC AI enforcement.
Why AI Ads Are More Challenging for Marketers, Advertisers & Agencies
It's All About Net Impression
Net Impression is the most fundamental concept of advertising law as applied by the FTC. So, what is Net Impression?
Net Impression is the overall message consumers take away from an ad.
Stated differently: it isn't what you say in your ad; it's what consumer's think you say.
Net Impression includes:
* Express claims (text and verbal);
* Implied claims (example: images);
* Format (example: formatting as a news article to hide the fact that it's really an ad); and
* Overall context of the ad.
The FTC understands how the general perception of AI transitioned rapidly from the launch of ChatGPT in November 2023.
* Initially, AI was perceived as an incremental change in existing technology.
* Then rapidly the perception transitioned to game changing technology, and ultimately to transformative technology.
* The result: given the power of AI and the general perception that it's truly transformative, the FTC has demonstrated it hyper-concern in its enforcement actions that it may be relatively easy to deceive consumers with AI ad claims, even those consumers who are acting reasonably.
What's the FTC "AI Game"?
Note: the term "game" is not intended to be disrespectful; instead it's used in the "business school" sense where game theory is widely used for issues like substantiation.
The FTC's Big Requirement: Net Impression must be substantiated prior to publication, failing which it's a violation of the FTC Act.
The Catch: substantiation for most (if not all) AI claims is difficult, given the FTC's hyper-concern regarding the transformative nature of AI and resulting Net Impression.
The "AI Game" (It's All About Net Impression):
* Substantiate the Net Impression of all AI claims in the ad; or
* Qualify the AI claims with disclosures that make substantiation possible.
* Essentially, it's a balancing act between Net Impression for AI claims and qualifying disclosures that enable substantiation for the ad.
Classic Example: OpenAI's disclosures following the initial launch of ChatGPT:
* "Occasionally generates false information;"
* "Occasionally produces harmful instructions or biased content;" and
* "Limited knowledge of world events after 2021."
FTC AI: Avoid Operation AI Comply by Using Qualifying Disclosures
These are the kinds of AI ad claims that have already landed companies in hot water without qualifying disclosures:
1. Unqualified Non-Specific Relationship with AI Claim: "Incorporates AI."
2. Unqualified Non-Specific Implied Claim of Performance or Superiority: “Powered by AI.”
3. Unqualified Specific Results Claims:
* “Compliant with WCAG / ADA in 48 hours”,
* “Runs your ecommerce store automatically”,
* “Replaces the need for a lawyer, developer, or compliance officer”, and
* “Fully automated legal compliance”.
These unqualified AI claims require conspicuous qualifying disclosures including:
* Transparency for how the AI works;
* Clear and conspicuous, plain-language explanations of AI capabilities and related risks;
* Evidence that the AI consistently delivers the advertised results; and
* Disclaimers, provided they don't contradict the net impression of ad claims.
Avoid Personal Liability for Deceptive AI Claims
Founders and execs for marketers, advertisers, and agencies can be held personally liable for violation of AI regulations if they:
* Directed the ad campaign;
* Signed off on exaggerated AI or unsubstantiated AI claims; or
* Ignored internal warnings about efficacy (does it perform as advertised).
Case in Point: eCommerce Builders - the individual founder and CEO was named as a defendant alongside the business creating the risk of joint and several personal liability.
Why the New FTC Regulations Can Help You Grow Your Business
Done correctly, transparent and compliant AI messaging builds trust with customers and sets you apart from competitors who are overhyping.
* Think of this as an opportunity:
* Consumers are increasingly skeptical of exaggerated AI claims known as “AI Washing” (the term borrowed from the term “green washing” that described prior hype for products and services that were environmentally friendly);
* Transparent, substantiated claims build credibility; and
* Compliance reduces the risk of refunds, chargebacks, and FTC AI enforcement actions.
Knowing the rules of FTC artificial intelligence regulation is a competitive advantage.
Conclusion: Key Takeaways and Recommended Resources
Key takeawaways from this checklist for AI ad claims include:
* Avoiding liability associated with FTC Operation AI Comply is essential.
* Compliance with AI regulations requires a clear understanding of how to play the "AI Game."
* Develop and apply strategies for compliance with FTC artificial Intelligence requirements for ad claims.
* Avoid FTC AI enforcement by qualifying AI ad claims.
* Seek AI legal advice to make sure you're on the right track.
