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The Federal Trade Commission applies existing consumer protection law, the FTC Act's prohibition on unfair or deceptive acts, to AI products and services. Operation AI Comply (September 2024) brought five actions over deceptive AI product claims, an AI review generator, and AI-themed income schemes. The posture has since shifted: in December 2025 the FTC set aside its 2024 Rytr order, saying the complaint did not meet FTC Act requirements and the order unduly burdened AI innovation. Deceptive AI claims that harm consumers remain enforceable.
If you market AI capabilities to customers, the FTC's existing authority applies to any claims you make about your AI. Claiming your AI is 'bias-free', '100% accurate', or 'fully autonomous' when it is not is deceptive advertising. Your AI marketing copy, product pages, and sales materials should accurately reflect what your AI can and cannot do. The FTC has specifically warned against using AI to generate fake reviews or testimonials, a practice it treats as deceptive.
Up to $53,088 per violation of FTC Act Sections 5(l), 5(m)(1)(A) and 5(m)(1)(B), which cover FTC order and trade-regulation-rule violations (2025 level; the FTC kept the 2025 amounts for 2026)
The FTC's 'Operation AI Comply' announced five law enforcement actions over deceptive AI claims and schemes. DoNotPay claimed to offer 'the world's first robot lawyer'; Ascend Ecom and Ecommerce Empire Builders sold AI-powered online store and income schemes; Rytr sold an AI 'writing assistant' that generated detailed fake consumer reviews; and FBA Machine (also Passive Scaling) promised guaranteed income from AI-powered storefronts.
Outcome: DoNotPay agreed to pay $193,000 and notify past subscribers. Rytr's proposed order barred it from selling any service promoted for generating consumer reviews (the FTC set that order aside in December 2025). The FTC said FBA Machine cost consumers more than $15.9 million; the store-scheme cases went to federal court.
From 2012 to 2020, Rite Aid used AI facial recognition in hundreds of stores to flag suspected shoplifters. The FTC said the system produced false matches that led staff to accuse customers of wrongdoing, that its actions disproportionately affected people of color, and that Rite Aid did not test or document the system's accuracy.
Outcome: Rite Aid is prohibited from using facial recognition for surveillance for five years. It must delete, and direct third parties to delete, images collected by the system and any algorithms built from them, and implement an information security program overseen by top executives.
DoNotPay marketed 'the world's first robot lawyer.' The FTC alleged the company did not test whether its chatbot's output matched a human lawyer's and did not hire or retain any attorneys. Part of Operation AI Comply.
Outcome: $193,000 settlement, made final on February 11, 2025. DoNotPay must notify consumers who subscribed between 2021 and 2023 about the limits of its law-related features, and may not claim it can substitute for any professional service without evidence.