FTC issues guidance on advertising AI products

The U.S. Federal Trade Commission (FTC) urged businesses to “keep AI claims in check.”

Marketers: Keep your #AI claims in check. New on the FTC Business Blog: https://t.co/3QA4UQ9iEt #advertising #marketing #ArtificialIntelligence pic.twitter.com/6XCv09NIPi

— FTC (@FTC) February 27, 2023

According to the agency, businesses often use the phrase ‘AI-powered’ and other variations in product descriptions without justification.

“One thing is certain: this is a marketing term. … Some advertisers will not be able to resist overuse and misuse of them,” the commission said.

The agency warned that such claims may be considered “false or unfounded.” The FTC urged marketers to evaluate advertising materials against several criteria:

• Overstating capabilities — performance claims are deceptive if not supported by evidence;
• Contrasting a regular product with an AI product — evidence is required for a comparative claim;
• Risks — accountability for unpredictable results of algorithmic systems;
• Direct presence of the technology — using AI tools in development is not the same as an AI product.

The FTC reminded that during reviews regulators may go “under the hood” and examine other materials to verify the truth of advertising promises.

“You don’t need a crystal ball to predict what the Federal Trade Commission may do when these statements are not substantiated,” the agency concluded.

This is not FTC’s first statement on AI. In April 2021 the regulator released guidance, which focused on fairness and equity as well as marketing.

In September 2022, the U.S. FTC vowed to protect gig workers from discriminatory algorithms.

In August, the FTC launched a regulatory procedure for surveillance technologies, algorithms and data-security.

In September 2021, Democratic senators urged the Commission to investigate Tesla’s advertising claims of autonomous driving.