AI-Washing Enforcement Crackdown to Withstand Trump Rollbacks
Recent years have seen a surge in companies misrepresenting their use of artificial intelligence (AI), a phenomenon known as AI washing. While some experts anticipated a decrease in enforcement under the new administration, regulators appear committed to cracking down on these misleading claims.
Enforcers like the Securities and Exchange Commission (SEC), the Federal Trade Commission (FTC), and state securities regulators have all taken steps to address AI washing through enforcement actions. Although rulemaking focused on AI washing is not a top priority, these agencies are likely to continue pursuing cases against companies making deceptive statements about AI.
Experts suggest that traditional enforcement mechanisms will continue to be utilized in investigating cases of AI washing, especially when there is evidence of fraud. This approach aligns with the SEC’s acknowledgment that AI washing raises similar concerns to longstanding issues of misleading disclosures.
Many companies are eager to capitalize on the trend of AI and have been overstating their use of AI in communications with investors and customers. Some companies have received enforcement actions for exaggerating their use of AI technology, and the SEC has indicated increased scrutiny of financial firms’ AI practices in the coming year.
Regulators like SEC Chair Gary Gensler and FTC Chair Lina Kahn have expressed concerns about AI-related deceptive practices. Despite potential leadership changes, the agencies are likely to continue addressing these issues.
While rulemaking efforts in this area may face challenges, it is expected that enforcement actions against AI washing will persist. Companies are advised to accurately represent their use of AI technology to avoid regulatory scrutiny and potential legal consequences.
Overall, while the landscape of AI regulation may shift, it is clear that enforcement actions against AI washing are here to stay. Companies should ensure transparency and accuracy in their communications regarding AI to avoid falling afoul of regulatory agencies.
