USA Trends and Developments Contributed by: Matthew Vittone, Frankfurt Kurnit Klein & Selz
The Use of AI in the Advertising Space Comes Under Legal and Regulatory Scrutiny in the USA In the USA, advertising is highly regulated at the fed - eral, state and local level. The Federal Trade Commis - sion (FTC) is the country’s primary advertising regula - tor, setting enforcement priorities in the industry by bringing actions and issuing guidance. State attorneys general are also playing an increasing role in adver - tising-related enforcement. In addition, the National Advertising Division (NAD) ‒ the primary advertising self-regulatory body in the USA ‒ plays a key role in reviewing advertising claims, resolving disputes, initi - ating challenges, and issuing industry guidance. The USA is a litigious environment with private plaintiffs also frequently bringing claims against advertisers. For advertisers, this means navigating a regulatory landscape that is highly active and dynamically evolv - ing with new advertising practices. Recently, AI has moved from hype to a significant driver of change in the advertising industry, helping advertisers to create content faster, optimise cam - paigns with greater precision, and open new ways of engaging audiences. Given AI’s potential to revolu - tionise the industry, it is no surprise that it has been an increasing focus of regulators in 2025. Although current FTC leadership has signalled less emphasis on broad new rule-making, agencies and law-makers have continued to be especially concerned with AI- related issues, including: • claims that overstate how much a product uses AI or overstate the AI’s capabilities; • false or misleading claims generated using AI; • transparency and disclosure; • virtual influencers; • reviews and testimonials;
is important for advertisers to bear in mind that – at least for now – long-standing advertising rules apply regardless of the technology or platform. Given that AI has been among 2025’s hottest topics, this piece will address some key recent AI-related legal develop - ments in the advertising space. AI-washing Advertisers have been quick to capitalise on the hype by promoting AI-related services and schemes. In response, the FTC and the NAD have emphasised that advertisers should not deceive consumers about what AI can do or how it works. Notably, the FTC has cracked down on deceptive practices that involve exaggerating, overstating or misrepresenting how much a product or service uses AI or the results these technologies can achieve (a practice referred to as “AI-washing”). In September 2024, the FTC announced Operation AI Comply, a law enforcement sweep targeting compa - nies it alleged were using AI claims to “supercharge deceptive or unfair conduct that harms consumers”. Operation AI Comply enforcement efforts included a claim brought against DoNotPay. Marketed as “the world’s first robot lawyer”, the service promised to help consumers file lawsuits or generate legal docu - ments. The FTC, however, alleged that the service provided inaccurate legal advice and lacked the expertise of a human lawyer. The FTC’s final order requires DoNotPay to pay USD193,000 in monetary relief and prohibits DoNotPay from advertising that its service performs like a real lawyer unless DoNotPay has sufficient evidence to back up this claim. Examples of other FTC enforcement actions include a claim brought against a company for overstating the accuracy and efficacy of its AI content detection prod - ucts and another claim against a business that used AI to pitch deceptive “get rich quick” opportunities. This string of enforcement actions signals the FTC’s heightened scrutiny of AI-related marketing claims and, in particular, those that deceive consumers about performance, accuracy or benefits. A key takeaway for advertisers is that AI-washing is increasingly a regulatory and reputational risk. If an ad suggests a product is faster, smarter, or more effective because of
• chatbots; • bias; and • digital replicas.
AI also poses novel questions under IP laws and rais - es concerns with the Hollywood unions. Both add to the legal risks advertisers must consider when lever - aging AI tools. As AI changes how advertisers think about liability, negotiation and creativity in the advertising space, it
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