New york enforces AI disclosure law amid rising legal scrutiny

In June, New York state implemented a law requiring companies to disclose when they use AI-generated models or actors in advertisements. Just months after the law took effect, the state has received four complaints alleging violations, all currently under review by the New York attorney general's office. The Synthetic Performers law is the first of its kind in the United States, and with growing anti-AI sentiment, it is expected to be followed by other states. Companies that use AI actors or influencers without disclosure may also be violating federal law, though the Trump administration has taken a hands-off approach to AI regulation. The first two anonymous complaints under the New York law, accusing two companies of using synthetic models or performers in their ads without disclosure, were recently obtained and published by Straight Arrow News. The first complaint alleges that 'premium performance wear brand' Athletifreak used AI-generated models when promoting its clothing products, with numerous screenshots from the company's website included. The second complaint targets London-based eyewear company Bloobloom, which is accused of running advertisements on social media that use synthetic performers and target New York residents. Both complaints were filed in June, shortly after the law went into effect. New York Governor Kathy Hochul emphasized that the state is setting the rules of the road for AI use, stating, 'Requiring simple, honest disclosure when an ad uses synthetic performers protects consumers, respects our creative workforce and keeps New York at the forefront of responsible innovation.' The law requires any company doing business in New York to comply, with fines of $1,000 for a first offense and up to $5,000 for repeat offenses. Last month, Amazon announced a new requirement for third-party sellers on its platform, stating that they must disclose when AI is used in product images and videos, referencing the New York state law. The Federal Trade Commission (FTC) has long had rules against fake reviews and testimonials, and recently updated its guidelines to cover AI-generated content. Violating the FTC's rules can result in fines up to $51,744 per violation. An FTC spokesperson stated, 'If there is an AI-created individual who is essentially playing the same function as a human actor in a commercial, and it is obvious that the speaker is merely an actor, that may be perfectly fine. If the AI-generated individual is providing a testimonial (which would necessarily be fake) or claiming to have specific expertise that affects consumers’ perception of the speaker’s credibility, that may be deceptive and could violate both the FTC Act and also the Rule on the Use of Consumer Reviews and Testimonials.' The FTC recently issued an AI policy statement suggesting that 'anti-innovation states' like New York lack the authority to enact AI laws. The statement reads, 'Importantly, President Trump’s proposed approach is a national AI framework, protecting innovation and competition by providing national regulatory clarity and certainty and avoiding a balkanized or patchwork regulatory approach driven by the states — or, most dangerously, imposed by certain anti-innovation state governments on the rest of the country.' If the FTC moves to strike state laws prohibiting deceptive AI ads without increasing its own enforcement, it could lead to increased sketchiness in advertising. Companies are already openly advertising services to create 'AI influencers' to promote products. For now, states like New York are stepping up AI regulation, likely due to the Trump administration's hands-off approach to AI regulation. The four complaints submitted under New York's law are likely just the beginning as awareness of the new AI advertisement regulation spreads.