Clicks, Codes, and Consequences: Regulating AI-Generated Advertising
By: Inaaya Firoz
Edited by: Devon Gura and Chukwunonso Kojo Onwaeze
When ChatGPT was released by OpenAI to the general public in 2022, it opened new avenues for AI-generated content in marketing. AI-generated content in marketing can include individuals promoting services using AI-generated bots, usually without clear disclosure of the ads. Existing federal and state laws regulating deceptive advertising were designed for human actors and do not address AI-generated content. Influencers continue to fail to disclose whether they are sponsored, facing backlash, yet startups like TurboAI, which continue to do this, do not face the heat. Now, AI is commercially embedded in social media advertising.
While there is existing legislation to regulate deceptive advertising and false endorsements, those frameworks were designed for identifiable commercial speakers. They do not account for AI-generated advertising, which appears in other platforms like TikTok, or address the gap in the Lanham Act, which is the primary statute governing trademark law. As it stands, there is some gray area in advertising regarding the use of AI, and legislation must be created not only to define AI but also to regulate it properly.
Legally, it is challenging to enforce AI-generated advertising because, as of March 2026, there is still no universally accepted definition of artificial intelligence. In December of 2025, in accordance with Executive Order 14179 (Removing Barriers to American Leadership in Artificial Intelligence), President Donald J. Trump sought to establish and “sustain and enhance the United States’ global AI dominance through a minimally burdensome national policy framework for AI.” [1] Under this executive order, definitions and enforcement frameworks also remain unclear. Trump also laid out the need for guidelines, but they were to be issued within 60 days of the Executive Order being passed, and as of early March, there are no updates. In Executive Order 14179, Donald J. Trump mentions S. Code § 45, but it is unclear whether it applies to models and remains pending approval.
To date, 15 U.S. Code § 45 reads as “Unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are hereby declared unlawful.” In this context, unfair or deceptive acts or practices are defined as acts or practices involving foreign commerce that “involve material conduct occurring within the United States.” In response to this, remedies can include restitution to domestic or foreign victims. [2] Depending on where it was created, large language models (LLMs) like ChatGPT or CloudAI could be classified under these categories, but to date, 15 U.S. Code § 45 has not been modified.
AI-generated content also challenges traditional copyright protections, since they currently require human authorship. In the past, the U.S. Copyright Office has refused to register content “produced by a machine or mere mechanical process that operates randomly or automatically without any creative input or intervention from a human author.” [3] There is also a lack of federal legislation protecting privacy in AI-generated ads, and there is a legal gray area when AI uses someone’s likeness without consent. States like Tennessee and New York have expanded publicity statutes to address unauthorized commercial uses, which “may extend to newer forms of commercial exploitation facilitated by digital platforms, such as influencer marketing and brand partnerships on social media.” [4] Tennessee recently expanded the publicity statute to include “all acts of unauthorized publishing, performing, distributing, transmitting, or making available to the public.” [4] Most recently, New York passed S.8420-A/A.8887-B, which requires people creating advertisements to indicate whether or not they include AI-generated synthetic performers. A synthetic performer is defined as “a digital asset that is created, reproduced, or modified by computer, using generative artificial intelligence or a software algorithm, that is intended to give the impression that the asset is in an audio, audiovisual, and/or visual performance of a human performer when it is not recognizable as any identifiable natural performer.” [5] Other than these select few states, no state, locally, has explicitly laid out guidelines regarding AI and its place within previously established traditional copyright protections.
Federally, the closest legislation there is to New York’s recent act—S.8420-A/A.8887-B—which addresses AI performers, is the Lanham Act. The Lanham Act comes at a cost though, as it can offer protection against falsified human endorsements but is only applicable when there are recognizable human subjects. The Lanham Act was also created in 1946, and only updated in 2020, under the Trademark Monetization Act, but AI has only continued to grow since then. The Lanham Act established that “false endorsement and trademark infringement claims require proof of commercial use and a likelihood of consumer confusion, mistake, or deceit.” [4] There is some gray area in how the Lanham Act lays out its claim, addresses AI-generated endorsements, and whether courts require a “real” person to regulate them. Additionally, the scope of the Lanham Act is nuanced; claims such as false endorsements are limited to unauthorized commercial uses, and federal courts require consumer awareness of the individual to establish a likelihood of confusion. People who are not famous cannot sue the same way celebrities can when deepfakes are used under the Lanham Act, making the argument more nuanced.
AI and its role in content creation have outpaced existing legal frameworks, leading to rules that differ both on the federal and state level as well as and within platforms. As current legislation indicates, gaps in the FTC Act, the Lanham Act, Intellectual Property Law, and state law, as well as platform issues, highlight the need for a federal framework. While artificial intelligence, in itself, does not have a human element, there is no single source to point the problem to when it comes to regulation. Regulation must also balance commercial AI speech vs. First Amendment protections. A comprehensive federal framework is necessary that incorporates synthetic performers, commercial use, intellectual property, and guidance on platform governance.
Notes:
Trump, Donald J. 2025. “Ensuring a National Policy Framework for Artificial Intelligence.” The White House. December 11, 2025. https://www.whitehouse.gov/presidential-actions/2025/12/eliminating-state-law-obstruction-of-national-artificial-intelligence-policy/.
“15 U.S. Code § 45 - Unfair Methods of Competition Unlawful; Prevention by Commission.” n.d. LII / Legal Information Institute. https://www.law.cornell.edu/uscode/text/15/45.
Zirpoli, Christopher T. 2025. “Generative Artificial Intelligence and Copyright Law.” Congress.gov. 2025. https://www.congress.gov/crs-product/LSB10922.
United States Copyright Office. 2024. “Copyright and Artificial Intelligence.” https://www.copyright.gov/ai/Copyright-and-Artificial-Intelligence-Part-1-Digital-Replicas-Report.pdf.
Ginaris, Michael. 2025. “NY State Senate Bill 2025-S8420A.” NYSenate.gov. 2025. https://www.nysenate.gov/legislation/bills/2025/S8420/amendment/A.
Bibliography:
Ginaris, Michael . “NY State Senate Bill 2025-S8420A.” NYSenate.gov, 2025. https://www.nysenate.gov/legislation/bills/2025/S8420/amendment/A.
LII / Legal Information Institute. “15 U.S. Code § 45 - Unfair Methods of Competition Unlawful; Prevention by Commission,” n.d. https://www.law.cornell.edu/uscode/text/15/45.
Trump, Donald J. “Ensuring a National Policy Framework for Artificial Intelligence.” The White House, December 11, 2025. https://www.whitehouse.gov/presidential-actions/2025/12/eliminating-state-law-obstruction-of-national-artificial-intelligence-policy/.
United States Copyright Office. “Copyright and Artificial Intelligence,” July 2024. https://www.copyright.gov/ai/Copyright-and-Artificial-Intelligence-Part-1-Digital-Replicas-Report.pdf.
Zirpoli, Christopher T. “Generative Artificial Intelligence and Copyright Law.” Congress.gov, 2025. https://www.congress.gov/crs-product/LSB10922.