MALTA Law and Practice Contributed by: Karl Tanti and Christine Borg Millo, AE Legal
tions but also any reasonable consequential obliga - tions arising from the agreement. The Consumer Affairs Act further regulates such offers by prohibiting aggressive commercial practices that might coerce or mislead consumers into agreeing to recurring charges they would not otherwise have accepted.
Additionally, AI in advertising intersects with existing EU and Maltese regulations, including the Consumer Affairs Act, the Unfair Commercial Practices Directive, and the GDPR, particularly regarding profiling, auto - mated decision-making, and targeted marketing. Mis - use of AI, such as creating manipulative, deceptive, or discriminatory ads, could therefore trigger liability under both the AI Act and existing consumer protec - tion or data protection laws. 8.2 AI-Related Claims Claims that a product is developed with AI, powered by AI, or has AI-related capabilities are subject to the emerging AI-specific regulations under the AI Act, as it includes provisions that directly impact how busi - nesses can market AI-related products. Businesses must clearly inform consumers when AI is used in a product or service. This includes disclosing the use of AI in product descriptions, advertisements, and other marketing materials. The Act classifies AI systems into different risk cat - egories (unacceptable, high, limited, and minimal risk). Higher transparency obligations apply to higher-risk AI systems, which may include products marketed as “AI-powered”. The Act, moreover, prohibits certain AI practices that manipulate or deceive consumers, such as AI systems that exploit vulnerabilities or manipulate behaviour in ways that could cause harm. In addition to the AI Act, the European Commission has introduced a Code of Practice for General-Pur - pose AI Models. This voluntary code provides practi - cal guidance for businesses on how to comply with the AI Act’s transparency and other requirements. 8.3 Chatbots Under the AI Act, there are specific rules and guidance regarding the use of chatbots, particularly concern - ing transparency and consumer protection. The AI Act classifies AI systems based on their risk level, wheth - er high-risk AI systems, subject to stringent require - ments, including risk assessments, data governance, and transparency obligations, or else limited-risk AI systems, with most chatbots typically falling into this
8. Artificial Intelligence 8.1 AI and Advertising Content
The EU Artificial Intelligence Act (AI Act) officially entered into force on 1 August 2024, marking the beginning of its phased implementation across all 27 EU member states, including Malta. However, the Act’s provisions will become fully applicable over a series of deadlines extending through August 2027. The AI Act establishes a risk-based framework for AI systems, including those used in marketing, advertis - ing, and content generation, with the goal of protect - ing consumers, ensuring transparency, and preventing manipulative or discriminatory practices. Under the AI Act, AI systems used in advertising may be classified as high-risk or limited-risk, depending on the potential impact on consumers. Key rules relevant to advertising include: • Transparency and Disclosure: Consumers must be made aware that AI is used to generate or person - alise content, targeting, or recommendations. • Data Quality and Fairness: Training datasets must be accurate, representative, and free from biases that could lead to discriminatory advertising or misleading outcomes. • Human Oversight: Organisations must implement mechanisms to allow human review and inter - vention where AI outputs could materially affect consumers. • Accountability and Documentation: Companies must maintain detailed records of AI design, data, and decision-making processes to demonstrate compliance.
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