The FTC proposed a policy statement applying section 5 deception principles to companies marketing AI systems. It says undisclosed steering of outputs away from users' stated or reasonably expected objectives may be deceptive, while ordinary hallucinations caused by technological limitations are treated differently. The document is proposed and non-final; comments were due July 31, 2026.
Action required
Monitor the FTC proceeding and assess whether any final policy statement is issued. No current binding compliance action is established by the supplied proposed document.
Binding status
proposed
Governing body
Federal Trade Commission
Direction
restrictive
Innovation impact
mixed
Enforcement details
Agency
Federal Trade Commission
Compliance requirements
Required disclosures
- Clear and conspicuous disclosures of objectives that cause an AI system to prioritize outcomes different from those users request or reasonably expect; the proposed statement says disclosures should not be buried in terms of service.
Prohibited practices
- Undisclosed steering of AI outputs toward unexpected objectives may constitute deceptive conduct under the proposed interpretation.
Transparency requirements
- Make disclosures about prioritized objectives clear, conspicuous, prominent, persistent where necessary, and sufficient to alter reasonable consumer expectations.
AI technologies
Affected industries
Affected roles
Frameworks
Cross-references
Cites laws
Section 5 of the Federal Trade Commission Act; 15 U.S.C. 45(a)(1)
Enriched 2026-07-07 · resolved via federal register complete
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