FTC Proposes AI Accuracy Policy Under Consumer Protection Law

The U.S. Federal Trade Commission (FTC) has issued a proposed policy statement explaining how Section 5 of the FTC Act could apply to artificial intelligence systems and is inviting public comments until July 31, 2026.

The draft guidance, issued under an executive order signed in December 2025, outlines how the FTC may assess AI systems that intentionally alter or suppress accurate outputs without informing users. The commission stated that while technical errors or AI hallucinations would not automatically violate consumer protection laws, deliberate changes to factual outputs without adequate disclosure could be considered deceptive. The proposal also examines potential conflicts between federal consumer protection rules and certain state AI laws, noting that compliance with state requirements may not shield companies from federal action if consumers are misled.

The FTC said companies can reduce legal risk by providing clear and prominent disclosures when AI systems prioritise objectives that differ from user expectations. The policy statement does not create new legal obligations and remains open for public consultation.