Consumer, anti-discrimination, liability and IP law
"There is no AI law in the US" is a trap. Existing law already applies, and regulators have said so repeatedly.
Consumer protection
The FTC Act Section 5 bans unfair or deceptive practices. That covers false claims about what AI can do, undisclosed data use, and unfair harms. The FTC's signature remedy is algorithmic disgorgement: deleting models and algorithms built with improperly obtained data (Everalbum, 2021; Weight Watchers/Kurbo, 2022). In 2023 it banned Rite Aid from using facial recognition for five years after biased false matches.
Anti-discrimination
| Law | AI relevance |
|---|---|
| Title VII (EEOC) | Hiring tools with disparate impact on protected groups; employers stay liable for vendor tools |
| ECOA / Regulation B (CFPB) | Lenders must give specific reasons for adverse action, even with complex models |
| Fair Housing Act | Tenant screening and ad targeting |
| FCRA | Consumer reports used for eligibility decisions; accuracy and dispute rights |
Disparate impact means a neutral-looking practice that disproportionately harms a protected group can be unlawful even without intent. That is exactly how biased AI usually fails.
Product liability and negligence
When AI-enabled products cause harm, ordinary liability theories apply. The EU's revised Product Liability Directive (2024) explicitly treats software, including AI, as a product.
Intellectual property
- Training data: copyright owners have sued over training on their works; US courts weigh fair use, and the EU allows text-and-data mining subject to rights-holder opt-outs.
- Outputs: copyright generally requires human authorship (Thaler v. Perlmutter); purely AI-generated works may not be protected.
- Trade secrets: confidential information pasted into public AI tools may lose protection.
- Licences: open models come with licence terms, sometimes including use restrictions.
Check your understanding
An employer uses a vendor's résumé screener that disproportionately rejects women. Who is liable under Title VII?
What is 'algorithmic disgorgement'?