USA Law and Practice Contributed by: Katelyn Patton, Frankfurt Kurnit Klein & Selz
At the state level, there is an ever-increasing list of state statutes regulating automatic renewal and con - tinuous service programmes. Although these state laws do not dramatically change the regulatory land - scape, many introduce stringent new requirements. Auto-renew programmes have been the subject of recent regulatory enforcement at the federal, state and local level, in addition to self-regulatory actions at the National Advertising Division and class actions. The FTC Act’s prohibition on unfair and deceptive conduct applies equally to the use of AI in advertising. One of the FTC’s key concerns is marketers’ use of AI tools in ways that steer consumers unfairly or decep - tively into harmful decisions in areas such as financ - es, health, education, housing and employment. The FTC has warned that advertisers might be tempted to employ AI tools to sell products and services and has reminded advertisers that misleading consumers via doppelgängers (such as fake dating profiles, phony followers, deepfakes or chatbots) could result – and, in fact, have resulted – in FTC enforcement actions. The FTC’s enforcement actions and guidance empha - sise that the use of AI tools should be transparent, explainable, fair and empirically sound, while fostering accountability. 8. Artificial Intelligence 8.1 AI and Advertising Content In its Endorsement Guides, the FTC revised the defini - tion of an “endorser” to include what “appear[s] to be an individual, group, or institution”, so as to include fabricated endorsers (including those created using AI). As discussed in 5.5.3 Consumer Reviews , the FTC Consumer Review Rule specifically prohibits reviews and testimonials that falsely claim to be from a real person, including those generated by AI. The FTC has been clear that existing consumer protection princi - ples apply squarely to AI tools and claims. Recent enforcement actions illustrate this trend. In Workado, LLC (formerly Content at Scale AI), the FTC ordered the company to stop making unsupported accuracy or efficacy claims about its AI “content detection” tool
– claims that purported broad applicability despite the tool having been trained almost solely on aca - demic content. The consent order requires Workado to retain evidence for any performance claims, notify affected customers, and submit annual compliance reports over the next four years. Meanwhile, in its case against Air AI Technologies and related entities, the FTC alleged misleading business-opportunity claims – namely, promises of high earnings (up to USD250,000), “guaranteed” refunds (which were often denied), and other representations about what their AI product could deliver. The use of AI tools raises significant IP concerns as well. Not only are there questions about whether there can be copyright ownership of the material that AI tools create (the US Copyright Office holds the posi - tion that there is no copyright protection for works created by non-humans, including AI), the tools them - selves may infringe – or create output that infringes – third-party rights. There are currently dozens of law - suits claiming that the way AI companies gather and utilise data and content from other sources to train their models violates copyright laws. There are ongoing efforts at both the federal and state levels to establish a legal framework protecting indi - viduals’ rights over the use of their voice and likeness, especially against misuse by AI ‒ examples of which are as follows. • Laws such as Tennessee’s Ensuring Likeness Voice and Image Security (ELVIS) Act have been introduced to specifically address the use of AI in creating unauthorised replicas, reflecting a growing trend to protect publicity rights from the implica - tions of advancing technology. • California enacted AB 1836 and AB 2602 to curb unauthorised digital replicas. AB 1836 bars AI “digital replicas” of deceased performers without estate consent (effective from 1 January 2026), whereas AB 2602 renders vague, unrepresented contract clauses allowing a replica to replace a performer unenforceable (effective from 1 January 2025). • New York’s Digital Replica Contracts Act, which took effect on 1 January 2025, voids contract terms permitting a digital replica to substitute for
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