On 1 July 2026, the Federal Trade Commission issued a proposed policy statement entitled 'Federal Trade Commission's Proposed Policy Statement Concerning the Suppression of Accuracy in Artificial Intelligence Systems.' The statement was issued under Executive Order 14365, signed 11 December 2025, which directed the FTC to clarify how the deception prohibition in 15 U.S.C. § 45 applies to AI models that alter or suppress output accuracy. The public comment period closed 31 July 2026; the statement remains in proposed form and has not been adopted as a final FTC policy instrument.
Section 5 of the FTC Act, codified at 15 U.S.C. § 45, prohibits unfair or deceptive acts or practices in or affecting commerce. The proposed statement reasons that an AI developer who configures a system to advance goals other than accuracy, including undisclosed ideological objectives, commercial preferences, or liability-avoidance design choices, likely deceives consumers within the meaning of § 45. Users who rely on outputs diverging from their reasonable expectation of objectivity receive a materially misleading product. The FTC explicitly excludes AI hallucinations arising from training or resource limitations from this analysis. The statement also asserts that state laws requiring AI output alterations may be impliedly preempted by federal consumer-protection law.
AI model developers, general-purpose AI providers, and consumer-facing AI service operators face the most direct exposure under the proposed analysis. Any company whose system is configured to suppress or steer output toward undisclosed objectives must either disclose that practice to users in a truthful and non-misleading way or reconfigure the system. Enterprises deploying third-party AI models in consumer-facing applications should review vendor agreements and model documentation to assess whether output-shaping arrangements create downstream § 45 liability.
The proposed statement is not a final FTC rule and carries no independent penalty authority. The FTC can cite it in enforcement actions under § 45, but its persuasive weight before federal courts remains untested. The preemption analysis targeting state accuracy-alteration mandates may face constitutional or statutory challenge; no federal circuit court has yet addressed this preemption question in the AI context.
We may advise on US AI regulatory compliance, including FTC Act obligations and state-federal preemption issues in the AI sector, and can introduce clients to specialists in our partner network. Contact us to discuss your organisation's exposure. Work we undertake includes AI compliance audits, AI vendor contract review, consumer-protection regulatory risk assessment, and AI governance policy structuring.