Trump plans to roll back FTC enforcement against AI companies

The Trump administration has signaled plans to roll back Federal Trade Commission enforcement actions against AI companies, potentially ending an era of regulatory oversight that protected consumers from deceptive and harmful AI technologies. This shift could accelerate AI deployment while reducing safeguards for accuracy, fairness, and consumer protection, fundamentally altering how AI companies are held accountable for their products.

What you should know: The FTC under Biden chair Lina Khan took multiple enforcement actions against AI companies for misleading consumers and deploying harmful technologies.

• The agency fined Evolv, a security company, for lying about AI-powered security checkpoints that failed to detect weapons, including a seven-inch knife used to stab a student.
• It targeted Intellivision for unfounded claims about bias-free facial recognition technology.
• The FTC also went after startups selling fake “AI lawyer” services and AI-generated product reviews.

The big picture: Trump’s AI Action Plan explicitly targets FTC enforcement, promising to review all Biden-era actions “to ensure that they do not advance theories of liability that unduly burden AI innovation.”

• The plan positions FTC actions as obstacles in an “arms race” to develop AI faster than China.
• The administration will also withhold federal AI funding from states with “burdensome” regulations.
• This represents a “try first” approach aimed at accelerating AI adoption across government and industry.

Why this matters: The enforcement rollback removes a key protection mechanism for Americans harmed by AI technologies, according to former FTC attorney Leah Frazier.

• “There will be fewer, if any, enforcement actions about how companies are deploying AI,” says Frazier, who worked at the agency for 17 years before leaving in May.
• She warns this approach “is dangerous for the public.”

Key details about FTC leadership changes: Trump has already moved aggressively against the agency’s independence.

• He fired two Democratic commissioners in March, though a federal court ruled one firing illegal and restored Rebecca Slaughter to her position.
• Commissioner Alvaro Bedoya resigned rather than fight his dismissal in court.
• Slaughter now serves as the sole Democrat on the commission.

Two types of enforcement at risk: Former FTC advisor Frazier distinguishes between cases that may survive versus those likely to disappear.

• Deception cases, where companies mislead consumers about AI capabilities, enjoyed bipartisan support and may continue.
• “Responsible use” cases that hold companies liable for AI harm without proving deception are more vulnerable to elimination.

The most significant precedent: The FTC’s 2023 action against Rite Aid, a major pharmacy chain, represents the type of enforcement most at risk under Trump.

• The agency banned the pharmacy chain from using facial recognition for five years after finding it falsely flagged customers, particularly women and people of color, as shoplifters.
• “Acting on false positive alerts,” the FTC wrote, Rite Aid employees “followed consumers around its stores, searched them, ordered them to leave, [and] called the police to confront or remove consumers.”
• This case went beyond deception to hold companies accountable for how AI technology actually harms people.