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Last update Mar 23, 2025

New FTC Artificial Intelligence Regulations for Marketing Claims: Avoid Trouble with Effective FTC AI Guidance

Artificial (AI) intelligence is transforming the way we do business and interact with the world around us.

AI is also attracting increased scrutiny and FTC AI enforcement actions from the Federal Trade Commission (FTC).

The FTC is charged with the authority to:

    *   Regulate deceptive and unfair advertising claims and practices, and

    *   Enforce laws and regulations protecting consumers.

This checklist breaks down how to protect yourself and your business from deceptive advertising violations under the new FTC AI regulations—using real examples from recent FTC cases for FTC AI guidance.

Two Things Happen When You Advertise 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 Recent FTC AI Ad Compliance Failures

The FTC has issued clear FTC AI Guidance: 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 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, FTC AI enforcement launched with a press release for FTC AI guidance dated September 25, 2024 titled: “FTC Announces Crackdown on Deceptive AI and Schemes.”

FTC AI Guidance 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, FTC artificial intelligence compliance rules apply to you.

Examples for how AI Compliance rules 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 Why the FTC is Cracking Down on Deceptive AI Marketing Claims

The FTC isn't theorizing about AI deception—it's actively bringing enforcement actions against companies that make exaggerated or misleading AI-related promises.

Recent FTC AI enforcement actions show that the agency 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—and 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, FTC artificial intelligence compliance is now a top priority for FTC AI enforcement.

Why AI Ads Are More Challenging

Generally, to avoid deceptive advertising the seller is required to substantiate all ad claims, and the requirement is to have substantiation, but not necessarily to disclose it to consumers incident to the ad. There are exceptions, of course, for "generally expected results" disclosures for specific performance claims.

However, with AI ads, the requirement for disclosures is "baked into" the ad itself for purposes of both maintaining transparency and compliance.

For example, in the FTC's Compliant in the accessiBe case, accessiBe advertised the unqualified claim "AI-powered web accessibility solution", yet the FTC alleged that accessiBe failed to adequately disclose that its widget didn't remediate content hosted on third-party web domains and subdomains (essentially disclose what AI does and what it doesn't do).

In the FTC's 2023 blog post "Keep your AI Claims in check" the FTC stated that the term "artificial intelligence" is an ambiguous term, suggesting that the term itself could be misleading absent a disclosure of specifically what is the AI element, what it does, and what it doesn't do.

In the same blog post, the FTC raised the question: "Are you aware of the risks?", suggesting that the failure to disclose reasonably forseeable risks, particularly if the risk yields biased results, could be a deceptive ad or even an unfair business practice.

Risk concern may have motivated OpenAI to disclose conspicuously the following for ChatGPT after initial launch:

    *  "occasionally generate false information;"

    *  "occasionally produce harmful instructions or biased content;" and

    *  "limited knowledge of world events after 2021."

FTC AI Guidance: Avoid “Red Flag” FTC AI Marketing Claims and Provide Material Disclosures

These are the kinds of “red flag” claims that have already landed companies in hot water:

Example of Unqualified General Claim: “Powered by AI.”

Examples of Unqualified Specific Results Claims:

    *  “Compliant with WCAG / ADA in 48 hours”,

    *  “Runs your ecommerce store automatically”,

    *  “Replaces the need for a lawyer / developer / compliance officer”,

    *   “Fully automated legal compliance”.

These unqualified AI claims require documentation and conspicuous 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.

    *  ]There is a framework that will assist you.

Avoid Personal Liability for Deceptive AI Claims

Founders and execs for marketers, advertisers, and agencies can be held personally liable 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.

Is There a Framework for AI Marketing Claims Compliance?

The FTC has a framework for evaluating AI marketing claims based on two pillars:

    *   Transparancy, and

    *   Compliance.

The FTC made this clear in 2024 by announcing it's "Crackdown on Deceptive AI and Schemes."

A famework is a structured approach to problem solving providing value in several forms:

    *   Clarity:  You know exactly what steps to take, and you avoid making random, inconsistent decisions.

    *   Efficiency:  You're more productive, no more reinventing the wheel.

    *   Risk Reduction:  You minimize costly mistakes.

The FTC doesn't disclose its framework, per se. Instead, the FTC discloses glimpses of its framework in the context of its AI-related enforcement actions and published guidance.

Nevertheless, a careful reading of these enforcement actions and guidance can yield insights sufficient for modeling the FTC's framework.

Conclusion: Key Takeaways and Recommended Resources

Here's what we've covered.

    *   The FTC is actively enforcing deceptive AI claims across industries;

    *   Vague or exaggerated “AI-powered” statements are high-risk;

    *   There is a framework that provides FTC AI guidance for compliance; and

    *   Personal liability is a real threat for marketers, advertisers and agencies.

AI compliance regulations are increasing, and the smart move is to take action to update your AI compliance strategies.

FTC Press Release: FTC Announces Crackdown on Deceptive AI Claims and Schemes

    *  eCommeceattorney.io: New FTC Earnings Claims and Income Claims Regulations