What the FTC's New AI Rules Mean for Your Small Business

AI-Generated Content and Disclosure Requirements

The most significant development for small businesses is the FTC's expanded enforcement of its existing deception and unfairness standards as applied to AI-generated content. The FTC has made clear that AI-generated testimonials, reviews, and endorsements are subject to the same disclosure requirements as paid human endorsements. If your business uses AI to generate customer reviews, testimonials, or social media content that appears to come from real customers, you are required to disclose that the content is AI-generated. Failure to do so is deceptive under Section 5 of the FTC Act — regardless of whether you intended to deceive anyone.

The second area of expanded enforcement is AI-generated advertising claims. The FTC has taken the position that businesses are responsible for verifying the accuracy of claims made in AI-generated advertising copy, just as they are responsible for claims in human-written advertising. 'The AI wrote it' is not a defense to a false advertising claim.

Chatbots and Customer Service AI

The FTC has issued guidance indicating that businesses using AI chatbots in customer service must disclose that the customer is interacting with an AI, not a human, when the customer sincerely asks. Designing a chatbot to evade this question or to deny being an AI is deceptive. Several enforcement actions in 2025 targeted businesses whose chatbots were programmed to claim to be human.

Practical Compliance Steps

For small businesses, the practical compliance steps are manageable. Review any AI-generated content that makes factual claims — product descriptions, health claims, performance guarantees — and ensure those claims are substantiated. Add disclosure language to AI-generated testimonials or reviews. Configure customer-facing chatbots to disclose their AI nature when asked. Document your review processes so you can demonstrate compliance if the FTC comes calling.

Documentation is the word that comes up most often when talking to attorneys about FTC AI compliance. The FTC's enforcement process typically begins with a civil investigative demand — a request for documents showing how your AI systems work, what claims they make, and what review processes you have in place. Businesses that can produce clear documentation of their AI use and review processes are in a much stronger position than those that cannot.

Our AI Workplace Policy Kit includes a section on regulatory compliance documentation, including a template for recording your AI tool inventory, use cases, and review processes. This documentation is useful not just for FTC compliance, but for any regulatory inquiry related to your AI use.