FTC Enforcement Policy on AI and Algorithmic Fairness
In effect since January 1, 2023
Overview
FTC has signaled it will use existing Section 5 authority to pursue deceptive or unfair AI practices, including biased algorithms, dark patterns in AI, and misleading AI marketing claims.
This is federal enforcement guidance.
Who this applies to
This regulation applies to both companies that build AI products and companies that use AI tools from other vendors.
AI categories covered
- Consumer-facing AI
- Financial services AI
- Algorithmic pricing
- Automated decision-making
Specific AI use cases:
- Dynamic and algorithmic pricing
- Credit scoring and risk assessment
- Customer profiling and segmentation
- Recommendation engines
What this requires you to do
Transparency notice required
Provide transparency notices. Inform affected individuals that AI is being used and how it influences decisions.
Bias testing required
Perform bias testing. Test your AI systems for discriminatory impact across protected classes.
Record-keeping required
Maintain records. Keep documentation of your AI systems, decisions made, and compliance activities.
Enforcement and penalties
FTC Act penalties up to $50,120 per violation. Consent decrees may impose ongoing monitoring and reporting obligations.
Source
Read the full text
https://www.ftc.gov/business-guidance/blog/2023/02/keep-your-ai-claims-check
Always verify current language and amendments at the official source.
Other Federal (FTC) regulations
Explore more rules in the same jurisdiction that may apply to your AI systems.
Want to know what else applies to your company?
Run a free XIRA scan to see all regulations that match your states and AI tools.