On November 7, 2023, Holland & Knight hosted a session featuring Michael Atleson, a seasoned attorney from the Federal Trade Commission (FTC). With nearly two decades of experience at the FTC, Mr. Atleson currently serves as the staff attorney for the department overseeing advertising practices.
During the interview, Holland & Knight Partner Anthony DiResta, who co-chairs the FTC’s Consumer Protection Defense and Compliance Team and previously led its Southeast Regional Office, delved into various aspects of artificial intelligence (AI) regulation and best practices with Mr. Atleson. The discussion encompassed key topics such as the fundamental concept of AI, the FTC’s stance on AI, the legal grounds for regulating AI, recent enforcement actions related to deceptive AI practices, federal regulations like the latest AI Executive Order issued by the Biden Administration, considerations on bias and discrimination, inter-organizational collaboration, monitoring AI implementations, and the future landscape of AI regulations.
The dialogue between Mr. Atleson and Holland & Knight shed light on the widespread integration of AI across various sectors of the U.S. economy, including finance, healthcare, technology, hospitality, transportation, education, media, telecommunications, and manufacturing. The insights shared during the conference provided invaluable guidance and insider perspectives to help businesses enhance their compliance frameworks and mitigate risks associated with AI applications in consumer contexts. As technological advancements in AI continue to evolve, Holland & Knight anticipates ongoing dialogues with key FTC stakeholders to navigate the regulatory landscape effectively.
Key Points Discussed:
Understanding AI Terminology:
The term “AI” holds diverse interpretations among different stakeholders, lacking a universally accepted definition within the FTC. However, federal resources often attribute broad meanings to AI, encompassing not just automated bots but also algorithms embedded in various equipment and systems across industries.
FTC’s Approach to AI:
The FTC views AI through the lens of consumer protection, emphasizing the need for businesses to address pricing transparency, impact assessment, and potential risks associated with AI implementations. While businesses may focus on the operational aspects of AI systems, the FTC underscores the importance of safeguarding consumer interests throughout the data processing lifecycle.
Legal Framework:
Under Section 5 of the FTC Act, unfair or deceptive practices in business operations are prohibited, providing a broad mandate for regulating AI applications. The FTC leverages existing regulatory provisions to scrutinize businesses utilizing AI in deceptive ways, emphasizing compliance with established norms to ensure fair advertising and AI usage.
Enforcement Actions:
Several enforcement actions have been initiated by the FTC against companies misusing AI technologies, including cases involving misleading claims about AI capabilities to lure consumers into investments or deceptive practices in healthcare and financial sectors. The FTC remains vigilant in combating fraudulent AI applications that could harm consumers.
Federal Initiatives:
The Executive Order on Safe, Secure, and Trustworthy Artificial Intelligence issued by the Biden Administration underscores the government’s commitment to addressing AI risks while fostering innovation and consumer protection. Collaborative efforts between federal agencies aim to enhance AI safety standards and mitigate threats to critical infrastructure.
Addressing Bias and Discrimination:
AI systems may inadvertently exhibit biases based on factors like race, gender, or language, posing challenges in ensuring fair outcomes. The FTC, in alignment with other agencies, prioritizes combating discrimination in automated systems, emphasizing the need for transparency, accountability, and proactive measures to address bias in AI algorithms.
Inter-Agency Cooperation:
Federal agencies, such as the FTC and the Consumer Financial Protection Bureau (CFPB), collaborate to assess the impact of AI algorithms on consumer screening tools, highlighting the importance of cross-agency coordination in addressing regulatory challenges posed by AI advancements.
Oversight and Disclosures:
Businesses are accountable for actions taken by third-party contractors in AI deployments, necessitating robust monitoring mechanisms to mitigate consumer risks. Transparent disclosures play a crucial role in clarifying AI functionalities and limiting liability exposure, aligning with civil liability frameworks to enhance consumer protection.
Compliance Measures:
The FTC emphasizes a proactive approach to AI governance, advocating for pre-release assessments, risk mitigation strategies, consumer education on data usage, vendor evaluation, and routine monitoring of AI systems to ensure ethical and lawful practices. Businesses are urged to demonstrate diligence in understanding and mitigating AI-related risks to uphold consumer welfare.
Future Regulatory Landscape:
Given the rapid evolution of AI technologies, regulatory frameworks are expected to evolve to address emerging challenges. Congress may explore international models like the AI Act of the European Commission to shape future AI regulations, emphasizing fairness and ethical principles in AI governance. While federal agencies continue to enforce existing laws against deceptive AI practices, industry stakeholders are encouraged to adopt best practices and engage with regulatory experts to navigate evolving AI regulations effectively.
For further insights on navigating AI regulations and their implications for businesses, the Consumer Protection Defense and Compliance Team at Holland & Knight stands ready to provide expertise and guidance tailored to specific organizational needs. Contact Anthony DiResta or the team for personalized assistance in understanding and complying with AI regulations.
Co-author Zachary Sherman, a future associate at Holland & Knight, contributed to this summary based on his experience as a summer associate with the firm.
This summary serves as a comprehensive overview of the key discussions and insights shared during the Holland & Knight session on AI regulation, offering valuable perspectives on navigating the evolving landscape of AI governance and compliance. For specific legal advice tailored to individual circumstances, it is recommended to consult with legal experts or the authors of this summary.
