AI tools are now embedded in how most online businesses operate. E-commerce brands use them for product descriptions, customer service chatbots, ad creatives, and marketing copy. SaaS companies rely on them for automation, analytics, and user interactions. For years, regulators largely watched from the sideline. That is changing fast. A new wave of AI disclosure laws — at the federal level, in multiple states, and across the EU — is creating specific legal obligations around how businesses communicate their use of AI to consumers. For online businesses, understanding and preparing for these rules now is far less expensive than responding to enforcement later.
Why Regulators Are Moving on AI Disclosure
The core concern driving AI disclosure legislation is consumer deception. Consumers regularly interact with AI-generated content — written reviews, synthetic influencers, AI-created product photos, chatbot conversations, AI voice-overs — without knowing it. When consumers believe they are reading an authentic customer review or receiving advice from a human representative, but they are actually engaging with AI output, regulators treat that as a potential deceptive practice.
The FTC has already warned businesses against misleading AI practices under its existing authority over unfair or deceptive acts. Failing to disclose AI-generated testimonials, endorsements, or marketing claims — particularly those that appear to come from real humans — can trigger enforcement actions under Section 5 of the FTC Act. The agency updated its endorsement guidance in 2024 to address AI explicitly and has signaled that enforcement in this space will continue to expand.
The EU AI Act and International Obligations
The EU AI Act, which took effect in stages beginning in 2024, creates transparency obligations for businesses whose AI systems interact with EU consumers. Among the Act’s requirements, AI systems that interact with humans must make clear to users that they are engaging with an AI — unless the context makes it obvious. Businesses deploying AI-generated content, chatbots, or synthetic media in the EU market must comply regardless of where the business is physically located. If you sell products or services to EU consumers, the Act may apply to your operations.
Non-compliance with the EU AI Act carries significant penalties — up to €35 million or 7% of global annual turnover for the most serious violations. Even for lower-risk AI systems, the Act requires documentation, transparency notices, and human oversight mechanisms that many businesses have not yet implemented.
State-Level AI Disclosure Laws in the United States
Individual states are creating their own AI disclosure requirements without waiting for comprehensive federal legislation. New York has introduced a law requiring advertisers to disclose when AI is used to create or significantly modify human performers in advertisements — targeting “synthetic performers,” meaning digitally created or AI-modified individuals designed to appear human. This law directly affects brands using AI-generated influencers, virtual models, AI-created video ads, and synthetic voice-overs in paid campaigns.
California has enacted legislation addressing AI in political advertising and is actively developing broader AI transparency rules. Colorado, Illinois, and Texas have introduced or passed laws addressing AI in specific high-stakes contexts. The patchwork of state laws creates a compliance challenge for businesses running national or multi-state campaigns — a practice compliant in one state may create liability in another.
What E-Commerce and SaaS Businesses Should Do Now
Audit Your Current AI-Generated Content
Review active marketing campaigns, product pages, influencer partnerships, and customer-facing AI tools. For each, ask: Was AI used to create or significantly modify the content? Would an average consumer know that? Does applicable law require a disclosure? This audit should cover written ads, testimonials, chatbot interfaces, AI-generated visuals, and any synthetic media used in video or audio advertising.
Update Vendor Agreements and Contracts
If your business uses outside agencies, creators, SaaS platforms, or AI vendors to produce customer-facing content, your agreements should clearly address who is responsible for disclosure compliance, who owns AI-generated content, and who bears liability for misleading advertising claims. This is especially critical for influencer marketing arrangements where FTC disclosure obligations already apply — layering in AI disclosure requirements without updating contracts creates significant gaps.
Plan for Multi-Jurisdictional Compliance
A campaign that complies with federal FTC guidance may still violate state-specific rules in New York or California. EU rules may apply to any campaign visible to EU consumers, even if your business has no European presence. Working with an internet law attorney who tracks both domestic and international AI disclosure developments allows you to build a compliance structure that holds up across jurisdictions rather than rebuilding it every time a new law passes.
Build Consumer Trust Alongside Compliance
Transparency about AI use does not have to undermine your brand. Consumers are increasingly aware that AI is used in content creation, and many respond positively to businesses that are upfront about it while emphasizing human oversight and quality control. Brands that proactively adopt disclosure best practices are better positioned than those that try to obscure AI use — both from a regulatory standpoint and from a long-term trust standpoint.
The AI disclosure landscape will continue to evolve rapidly. For guidance on compliance with current FTC rules, state AI laws, and international requirements, contact Revision Legal to speak with one of our e-commerce and internet law attorneys.
