HIGHLIGHTS:

• The Federal Trade Commission finalized a Decision and Order against an AI developer resolving allegations that it deceptively marketed its AI content detection tool as 98 percent accurate without substantiation.
• The August 2025 Order follows the FTC’s April 2025 announcement of a proposed settlement, which we covered in our earlier Hudson Cook Enforcement Alert.
• The final Order prohibits the company from making misleading or unsubstantiated efficacy claims about AI detection products unless supported by competent and reliable evidence, requires customer notifications, and imposes multi-year compliance and recordkeeping obligations.

CASE SUMMARY:

On August 21, 2025, the Federal Trade Commission (FTC) issued a final Decision and Order against an artificial intelligence (AI) developer (the “Company”), concluding an enforcement action first announced in April 2025. At that time, the FTC alleged the Company falsely marketed its AI content detection tool as predicting with 98 percent accuracy whether text was created by generative AI programs. The April announcement included a proposed consent order that was placed on the public record for a 30-day public comment period.

The August 2025 Order makes the proposed order’s obligations binding. Specifically, the Order prohibits the Company from making unsubstantiated or misleading claims about the accuracy of AI detection tools unless supported by competent and reliable evidence, including competent and reliable scientific evidence when appropriate. The Order also requires the Company to preserve and maintain detailed records of substantiating data, testing protocols, and statistical analyses used to support any product claims. In addition, the Company must notify all current and recent customers of the settlement, submit annual compliance reports for three years, and create and retain compliance-related records for up to ten years.

The Order, which is effective for 20 years, also subjects the Company to ongoing monitoring, including potential interviews of affiliated personnel and compelled document production. This enforcement action underscores the FTC’s continuing scrutiny of AI developers marketing the efficacy of their models and reflects the Commission’s focus on substantiation, consumer notice, and long-term compliance obligations.

RESOURCES:

You can review all of the relevant administrative filings and press releases at the FTC’s Enforcement Page.

• Complaint
• August 2025 Decision and Order
• FTC Press Release

Enforcement Alerts by Hudson Cook, LLP, written by the attorneys in the firm’s Government Investigations, Examinations and Enforcement and Litigation practice groups, are provided to keep you informed of federal and state government enforcement actions and related actions that may affect your business. Please contact our attorneys if you have any questions regarding this Alert. You may also view articles, register for an upcoming CFS Bites monthly webinar or request a past webinar recording on our website.