Impersonation Rulemaking: FTC Takes Steps to Tackle AI

Venable LLP

Venable LLP

On February 15, 2024, the Federal Trade Commission (FTC) announced a two-step approach to tackling impersonation fraud. First, the FTC finalized a rule regulating the impersonation of businesses and government entities (the Impersonation Rule). Later that day, the FTC proposed a revision to the Impersonation Rule to extend liability to those impersonating individuals.

The Impersonation Rule deems it unfair or deceptive to falsely pose as or misrepresent affiliation with a government or business entity. This could include using government seals, business logos, or spoofed email addresses. Even more broadly, the rule prohibits using government or business lookalike insignias or marks without prior authorization. The rule will become effective 30 days after it has been finalized.

The Impersonation Rule allows the FTC to seek consumer redress, or even penalties, in federal court for violative conduct. The Impersonation Rule is the FTC’s latest effort to carve out more specific enforcement areas through the rulemaking process and expand the agency’s remedial option in light of the AMG Capital Management LLC v. FTC decision.As the final rule statement explains, “the objective of this final rule is to make available a shorter, faster and more efficient path for recovery of money for injured consumers.”

The FTC proposed the revision to the Impersonation Rule in response to comments received during the rulemaking process of the original rule. Specifically, as FTC Chair Lina Kahn’s statement in support of the final rule and the new supplemental lays out, the agency seeks to address the production of AI “deepfakes” that can impersonate individuals with precision. Deepfakes, such as the voice cloning of loved ones and celebrities, can pose risks when implemented through communications or marketing efforts.

Finally, the FTC is also seeking comment on further expanding the rule to punish those who provide substantial assistance to Impersonation Rule violators. For example, this may result in punishing AI platforms who knew or should have known that their technology was being used to create harm through impersonation. Since technological developments in AI are advancing faster than enforcement agencies can respond, the FTC is attempting to implement policy aimed at keeping up. The Federal Communications Commission (FCC) has also taken recent rulemaking actions to limit the ability of AI technology to harm consumers.

Comments on the Impersonation Rule’s proposed revisions are due 60 days after being published in the Federal Register.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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