The FTC Enters a New Chapter in Its Approach to Artificial Intelligence and Enforcement
February 04, 2026 – In alignment with the Trump Administration’s prioritization of AI development and investment in the United States, the Federal Trade Commission (“FTC” or the “Commission”) has embarked on a new trajectory for its AI enforcement efforts. This includes, in some instances, setting aside previous consent orders.
Most notably, on December 22, 2025, the FTC set aside a final order against Rytr, an artificial intelligence (“AI”) company, partially due to the order being deemed “unduly burdensome” to AI innovation. The Commission had previously alleged that Rytr’s customer reviews writing service could potentially assist users in committing fraud by generating thousands of seemingly genuine customer reviews designed to deceive consumers.
Dual Approach to AI Regulation
Following the Rytr order, the FTC has adopted a dual approach to AI regulation. This includes reduced and sometimes revoked enforcement related to the actual capabilities of AI products, even in cases where the AI could potentially be used to deceive consumers. However, the FTC will continue to pursue enforcement against companies that deceive consumers about the capabilities of their generative AI.
This approach aligns with the FTC’s regulation of false advertising under Section 5 of the Federal Trade Commission Act (“FTC Act”). Recent enforcement actions indicate how the FTC plans to regulate consumer concerns regarding AI throughout the remainder of the Trump Administration.
The Trump Administration’s AI Action Plan
In the early days of his second term, President Trump announced an initiative to promote AI innovation, including the rollback of existing AI regulations. An executive order in January 2025 established a policy aimed at enhancing America’s global AI dominance by instructing federal agencies to identify and suspend any actions that hinder AI innovation.
The resulting July 2025 AI Action Plan directed federal agencies to reduce enforcement against AI companies. The FTC was specifically tasked with reviewing ongoing investigations to ensure that they do not advance theories of liability that unduly burden AI innovation and to review all final orders, consent decrees, and injunctions for potential modifications.
This strategy contrasts sharply with the approach of the Biden Administration’s FTC, which adopted a more cautious stance towards AI and its potential for consumer fraud.
Curtailed Enforcement Against AI Companies
The current FTC has largely ceased enforcement actions against AI companies regarding the capabilities of their products. No new enforcement actions of this nature have been identified, reflecting the Administration’s AI Action Plan. The FTC has even set aside its final consent order against Rytr, a rare move in the past two decades.
Rytr, an AI-powered writing assistant, faced allegations in September 2024 concerning its service generating detailed reviews that contained material details unrelated to the user’s input. The FTC claimed that Rytr’s service allowed users to post misleading reviews, ultimately harming both consumers and honest competitors.
Inflated AI Claims Still Risk FTC Action
Despite this shift, the FTC has not completely abandoned its regulatory role concerning AI products. Instead, it has returned to its foundational principles under Section 5, focusing on false claims made by companies regarding their AI offerings.
In May 2025, Chairman Ferguson described a “circumspect and appropriate enforcement” approach and highlighted several recent enforcement actions against companies for making false claims about their AI capabilities. This type of deceptive advertising is classic fraud that the Commission has historically pursued.
In 2025, the FTC initiated and settled several Section 5 AI enforcement actions, including a $1 million settlement with accessiBe for misrepresenting the ability of its AI-powered tools. Another case involved monetary judgments exceeding $20 million against Click Profit for false claims regarding the use of advanced artificial intelligence.
Conclusion
These FTC actions signify that while the enforcement landscape may be narrowing, the Commission does not intend to disengage from monitoring AI companies and their products entirely. A dual approach to FTC AI enforcement appears to be developing, with a focus on regulating false advertising while potentially easing the scrutiny on companies like Rytr.
Continued oversight of FTC enforcement actions will shed light on this dual approach and help identify which previous AI-related consent orders may be reconsidered. Companies producing AI products should remain vigilant regarding their claims and the evolving regulatory environment surrounding AI capabilities.
