The FTC’s AI Preemption Authority is Limited
Can the Trump administration preempt state consumer protection laws governing AI? The Federal Trade Commission (FTC) will soon try, but the agency’s authority to preempt state laws is limited.
Last December, President Trump issued an Executive Order (EO) titled “Ensuring a National Policy Framework for Artificial Intelligence.” The EO directs the Chairman of the FTC to issue a policy statement “explain[ing] the circumstances under which State laws that require alterations to the truthful outputs of AI models are preempted by the Federal Trade Commission Act’s prohibition on engaging in deceptive acts or practices affecting commerce.” Pursuant to the order, the agency has until March 11 to issue the statement.
Section 5 of the FTC Act prohibits unfair or deceptive acts or practices in commerce. The EO focuses on deception, defined as a misrepresentation, omission, or other practice that misleads a consumer acting reasonably in the circumstances, to the consumer’s detriment. For example, false advertising misrepresents the quality or usefulness of a product, tricking consumers into buying it.
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