FTC Regulations on AI Promotional Advertising of Live Events

 Katherine Daniels

  I. Background: The Who, the What, and the Where
         A. What is the FTC?

The Federal Trade Commission is a federal agency that “protect[s] the public from deceptive or unfair business practices and from unfair methods of competition through law enforcement, advocacy, research, and education.”[1] The FTC was created in 1914 as “part of the battle to ‘bust the trusts’” but Congress has expanded its power to “administer a wide variety of other consumer protection laws.”[2] The FTC is “especially active in enforcing regulations prohibiting false and deceptive advertising.”[3]

         B. What is AI?

Artificial intelligence (“AI”) has been around for a long time; the term was first coined in 1955 by John McCarthy.[4] However, since then AI has transformed and transcended into an utterly inescapable global phenomenon. While AI is the “hottest technology of our time,” experts “don’t know what AI [really] is.”[5] The most commonly used AI is ChatGPT, a large language model built from a vast neural network.[6] AI originally began as a “supercharged autocomplete machine” but is now more sophisticated than ever.[7] AI is moving towards artificial general intelligence, also deemed “superintelligence” which is set to “outpace college graduates by ‘2025/2026.’”[8]

While AI is a great tool in some circumstances, AI capability “is a growing concern for the international community, governments, and the public.”[9] Deepfakes, “media content created by AI technologies that are generally meant to be deceptive,” are not a new issue, but recently are a “growing tool for misinformation and digital impersonation.”[10] The Department of Homeland Security released an informational packet that explained the threats of generative AI deepfakes and how AI creates a deepfake video.[11] “Deepfakes are generated by machine-learning algorithms combined with facial-mapping software that can insert that data into digital content without permission.”[12]

         C. What is NIL?

Name, image, and likeness rights “refer to the ability of an individual to control and profit from the use of their name, image, and likeness in various forms of media, including advertising, merchandise, and video games.”[13] NIL is also known as the right of publicity, which is “an intellectual property right that protects against the misappropriation of a person’s name, likeness, or other indicia of personal identity—such as nickname, pseudonym, voice, signature, likeness, or photograph—for commercial benefit.”[14] The right of publicity is currently a state law-centered right, but a new bill, the Nurture Originals, Foster Art, and Keep Entertainment Safe (NO FAKES) Act of 2024 was introduced to the Senate on July 31, 2024.[15] The NO FAKES Act grants “a clear, federal right to control digital replicas of your own voice and likeness.”[16] This Act aims to protect individuals from unfair use through AI and “will empower victims of deepfakes; safeguard human creativity, and artistic expression; and defend against sexually explicit deepfakes.”[17]

    II. Current Regulations on Advertising in the Digital Age

         A. Current Regulation on Marketing and Endorsements Generally

The FTC Act prohibits “unfair or deceptive acts or practices” to “broadly cover[] advertising claims, marketing and promotional activities and sales practices in general.”[18] Online advertising is subject to the “basic principles of advertising law: 1. Advertising must be truthful and not misleading; 2. Advertisers must have evidence to back up their claims (“substantiation”); and 3. Advertisements cannot be unfair.”[19] The “unique features in online ads – including advertising delivered via social media platforms or on mobile devices – may affect how an ad and any required disclosures are evaluated.”[20] “Advertisers are responsible for ensuring that all express and implied claims that an ad conveys to reasonable consumers are truthful and substantiated.”[21] Disclosures “cannot cure a false claim” and can “only qualify or limit a claim to avoid a misleading impression.”[22]

“If a disclosure is required, it must be clear and conspicuous.”[23] This disclosure requirement is determined by the “performance – that is, how consumers actually perceive and understand the disclosure within the context of the entire ad” and the “key is the overall net impression of the ad.”[24] Because disclosures are the responsibility of the advertiser to ensure that their messages are truthful and not deceptive, disclosures “must be effective[] so that consumers are likely to notice and understand them in connection with the representations that the disclosures modify.”[25]

The FTC has set out factors for advertisers to consider whether a particular disclosure is clear and conspicuous: (1) proximity and placement; (2) prominence; (3) distracting factors in ads; (4) repetition; (5) multimedia messages and campaigns; and (6) understandable language.[26] A disclosure “is more effective if it is placed near the claim it qualifies or other relevant information,” so advertisers should be aware of how close together a disclosure is to the product’s description or visuals to be the most effective.[27] Advertisers are responsible for drawing attention to the required disclosures and should “[e]valuate the size, color, and graphics of the disclosure in relation to other parts of the website, email or text message, or application.”[28] Consumers may need the disclosure to be very obvious and repeated to ensure that they notice, read, or listen to the disclosure so they are not misled.[29] Multimedia messages may require special disclosures depending on the claims in the ad.[30] For example, audio claims should use audio disclosures; written claims should have written disclosures; and visual disclosures should be visible for a sufficient duration.[31]

The FTC concluded that online commerce’s boom requires insurance that consumers are not being deceived.[32] It “will continue to evaluate online advertising, using traditional criteria, while recognizing the challenges that may be presented by future innovation.”[33]

Endorsements follow a similar logic in preventing deception in the market.[34] An endorsement means:

any advertising message (including verbal statements, demonstrations, or depictions of the name, signature, likeness or other identifying personal characteristics of an individual or the name or seal of an organization) that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser, even if the views expressed by that party are identical to those of the sponsoring advertiser.[35]

Under the statute, “endorsements must reflect the honest opinions, findings, beliefs, or experience of the endorser,” and “may not convey any express or implied representation that would be deceptive if made directly by the advertiser.”[36] Endorsements may be paraphrased, but “may not be presented out of context or reworded so as to distort in any way the endorser’s opinion or experience with the product.”[37] Furthermore, celebrity endorsements are acceptable “only so long as [the advertiser] has good reason to believe that the endorser continues to subscribe to the views presented.”[38] Both advertisers and endorsers are subject to liability for false statements made during the course of the endorsement.[39]

         B. Current and Proposed Regulations on AI Marketing

On September 25, 2024, FTC Chair Lina Khan released a statement taking a stance against AI in the marketplace.[40] The agency took on five cases to address AI as “part of its new law enforcement sweep called Operation AI Comply.”[41] Khan stated:

Using AI tools to trick, mislead, or defraud people is illegal . . . . The FTC’s enforcement actions make clear that there is no AI exemption from the laws on the books. By cracking down on unfair or deceptive practices in these markets, FTC is ensuring that honest businesses and innovators can get a fair shot and consumers are being protected.[42]

The promotion of AI services and “seiz[ing] on the hype surrounding AI,” commonly referred to as “AI washing” requires a disclosure that those claims may not be substantiated.[43]

In a comment, the FTC expressed an interest in the difficult questions that AI poses to the advertising space.[44] One of those questions is related to creators’ ability to compete being unfairly harmed, but also consumers may be deceived when authorship does not align with consumer expectations, such as “when a consumer thinks a particular musician or other artist has created a work, but it has been generated by someone else using an AI tool.”[45] The FTC raised the issue that:

Conduct that may violate the copyright laws––such as training an AI tool on protected expression without the creator’s consent or selling output generated from such an AI tool, including by mimicking the creator’s writing style, vocal or instrumental performance, or likeness—may also constitute an unfair method of competition or an unfair or deceptive practice, especially when the copyright violation deceives consumers, exploits a creator’s reputation or diminishes the value of her existing or future works, reveals private information, or otherwise causes substantial injury to consumers.[46]

The FTC hosted a roundtable that included several creatives and software developers to explore “how the development and deployment of AI tools that generate text, images, and audio is impacting open and fair competition.”[47] There were several themes that resulted from the roundtable, most of which centered around when a creator consents to their work being used to train AI and how that is often not the case.[48] The group acknowledged that AI has the power to further opportunities for artists and create access to more people, but the AI has to be used “ethically and in a manner that recognizes intellectual property rights.”[49] They also discussed the effect of AI-generated content in the market:

On the output side, AI-generated content can easily flood markets, making it difficult for customers and other stakeholders to discern whether content is AI generated. AI-generated content can mimic the style of specific creators, and users of generative AI tools can exploit the name and reputation of the creator to gain sales and potentially compete with the creator. Participants said that when generative AI tools use artists’ faces, voices, and performances without permission to make digital impersonations, it can not only create consumer confusion, but it also can cause serious harm to both fans and artists.[50]

An interesting and important aspect also included the “great power imbalance” because “certain types of creative professionals are particularly vulnerable to exploitation . . . especially those who lack awareness or leverage in negotiating contract terms or the resources to enforce their rights.”[51] The participants expressed a hesitancy towards AI-generated content because it impacts their ability to “develop a unique style, voice, and brand to distinguish themselves” in the marketplace.[52]

The FTC has not yet imposed any rules or comments on generative AI in the marketplace but ensures that it will “vigorously use the full range of its authorities” and collaborate with the U.S. Copyright Office “as competition and consumer protection issues surrounding AI-enabled tools and technologies continue to develop.”[53]

    III. Live Event Marketing and Advertising

         A. Artist Agreements for Promotions/Advertisements

Promotion and advertising are generally included as provisions in the Artist Rider. While riders will vary from agreement to agreement, a promotion provision typically requires the artist/company to provide prior written approval when using an artist’s NIL to advertise the event. For example:

Sponsor shall have the right to offer posters, shirts and other items as premium merchandise to the public featuring the identification of one or more of the Sponsor’s Products and the Artist’s name and/or likeness and/or details of the Event; provided such items shall be subject to Manager’s prior approval as to quality, design, appropriateness and consumer value, which approval shall not be unreasonably withheld, conditioned or delayed.[54]

Here, the artist must approve the use of their NIL in advertising and was likely represented by good management to include that language. In other agreements, the artist’s NIL and promotional material provided to the promoter could be used at the promoter’s discretion, especially if the artist is unrepresented.

Currently, most, if not all, live event advertisements are in the form of social media posts and short-form videos. Events will post pictures and posters using the artist’s name and image to promote the show, and typically any photos or videos of the artist are made by the artists themselves.[55] However, creating and approving these advertisements can be very time-consuming and stressful for busy artists who are also promoting other events, new music, etc.

         B. Enter: AI

As discussed above, artificial intelligence is an amazingly powerful tool that can cut the time it takes to make and post advertisements. AI is powerful enough to use an artist’s NIL to make videos of them talking and moving around (i.e. deepfakes).[56] We know that AI can do it, but the real questions are: (1) is there a legal basis for using AI to make these ads; and (2) what happens if we do?

Artists are unlikely to jump on the AI promotion trend quickly and consent to their NIL being used in an AI algorithm. Participants at the FTC Roundtable explicitly stated that they are concerned that the “consent they have provided in the past in a different context will be used to justify the uncontemplated use of their work for AI training.”[57] The participants acknowledged the power of AI and its issues and expressed concerns with the “transparency and disclosure with respect to both the data used to train AIs and the provenance of new works generated by AI tools.”[58]

The right to use the artist’s NIL is an inherent property right that must be licensed, agreed to, and approved by the artist. This leads to the question of whether the AI also needs a license to use the artist’s NIL.

Courts in California are already grappling with this question. In January of 2024, the estate of George Carlin filed a lawsuit against Dudesy, LLC under a state right of publicity statute, the common law violation of the right of publicity, and copyright infringement.[59] The complaint alleges that the defendants used Carlin’s original copyrighted work in an AI algorithm to “create[] a script for a fake George Carlin comedy special and generate[] a sound-alike of George Carlin to ‘perform’ the generated script.”[60] The video was posted to the Dudesy podcast YouTube channel and was monetized.[61] The defendants did not have “permission to use Carlin’s likeness for the AI-generated ‘George Carlin Special,’ nor did they have a license to use any of the late comedian’s copyrighted materials.”[62] The complaint further alleges that the “piece of computer-generated click-bait . . . detracts from the value of Carlin’s comedic works and harms his reputation . . . [and] may also deter young audiences, who are unfamiliar with George Carlin, from engaging with his real work that is his legacy.”[63] The podcast also previously “created another one-hour ‘Special’ which depicted an AI-generated Tom Brady performing an AI-generated standup comedy routine.”[64] The case ended in a settlement, so there is no judicial opinion set forth the legal landscape for this issue. However, Carlin’s daughter Kelly said in a statement, “this case serves as a warning about the dangers posed by AI technologies and the need for appropriate safeguards not just for artists and creatives, but every human on earth.”[65]

This case exemplifies exactly what artists and other creatives are afraid of, and there are unclear legal repercussions to this behavior. The law in this area, as previously discussed, is wildly underprepared to handle the pace at which AI technology is currently developing. NIL laws and AI laws are an amalgamation of state statutes and common laws, and the passage of the NO FAKES Act would provide clarity on the ramifications of creating deepfake videos of artists for commercial benefit.

         C. FTC Disclosures

There is an additional layer of laws and regulations regarding advertisements from the FTC that would further complicate the ability of a promoter to use an AI-generated version of the artist to promote the event. The FTC and the Copyright Office have discussed the potential issues with AI in advertisements, hosting several roundtables surrounding the concerns of creatives and lawyers in the use of generative AI for commercial purposes.

The FTC’s basic requirements for advertisements are that the ad must be “truthful and not misleading,” claims must be substantiated, and ads “cannot be unfair.”[66] Disclosures are necessary “to prevent an advertisement from being deceptive, unfair, or otherwise violative of a Commission rule.”[67] The rules of Endorsements and Testimonials and Advertising also apply to “any advertising message . . . that consumers are likely to believe reflects the opinions, beliefs, findings, or experience of a party other than the sponsoring advertiser.”[68]

Generative AI ads of artists to promote an event are likely to be untruthful or misleading because reasonable consumers will be unable to detect the use of AI in place of the artists themselves. The Commission will “find deception if there is a representation, omission, or practice that is likely to mislead the consumer acting reasonably in the circumstances, to the consumer’s detriment.”[69] The reasonable consumer is not inspecting an Instagram post of their favorite artist promoting an upcoming show to see if the subject is the actual celebrity or an AI-generated version. Therefore, the promoter will need a disclosure statement that the post is AI-generated or will be subject to an FTC violation.

An effective disclosure statement must be clear and conspicuous that the ad is AI. The disclosure statement should be clearly seen on the screen of the video/image as a watermark and in the caption of the post to ensure that the reasonable consumer sees the disclosure.[70] An effective disclosure is determined by “the overall net impression of the ad,” so promoters should take the necessary steps to make clear to the reasonable consumer that the ad is AI-generated.[71]

Both the artist and the promoter need to be sure that the disclosure is clear and conspicuous because they are both liable to the consumer for false statements made in the advertisements.

         D. What Now and What’s Next

The FTC is still working on establishing rules for AI endorsements and AI in advertising generally. With the help of the USPTO and US Copyright Office, the agency will create and enforce rules that protect consumers and artists from the harsh effects of AI and deepfakes when promoting events.

The best protection for both the artist and the promotor from fraud, harmful repercussions, and FTC violations is to carve out the ability for the promoter to use the artist’s NIL in an AI algorithm in the Artist Rider. The provision should emphasize the importance of artist approval before posting and review by an event’s general counsel to ensure that the advertisement complies with all local/state NIL laws and the FTC regulations.

  1. About the FTC, Fed. Trade Comm’n, https://www.ftc.gov/about-ftc [https://perma.cc/9PN2-GN83] (last visited Jan. 12, 2026). ↑
  2. Id. ↑
  3. IP4 Business Law Monographs § 12.06 (2026). ↑
  4. Melissa Heikkila, A Short History of AI, and What It Is (and Isn’t), MIT Tech. Rev.: A. I. (July 16, 2024), https://www.technologyreview.com/2024/07/16/1095001/a-short-history-of-ai-and-what-it-is-and-isnt/ [https://perma.cc/JW8M-XX6S]. ↑
  5. Will Douglas Heaven, What Is AI?, MIT Tech. Rev.: A.I. (July 10, 2024), https://www.technologyreview.com/2024/07/10/1094475/what-is-artificial-intelligence-ai-definitive-guide/?truid=&utm_source=the_algorithm&utm_medium=email&utm_campaign=the_algorithm.unpaid.engagement&utm_content=07-15-2024 [https://perma.cc/5ES9-9YKF]. ↑
  6. Id. ↑
  7. Id. ↑
  8. Id. ↑
  9. The Rise of Artificial Intelligence and Deepfakes, Nw. Buffet Inst. for Glob. Affs.: Buffet Brief, Sep. 2025, at 1, 1. ↑
  10. Id. ↑
  11. Dept. of Homeland Sec., Increasing Threat of Deepfake Identities 3, https://www.dhs.gov/sites/default/files/publications/increasing_threats_of_deepfake_identities_0.pdf [https://perma.cc/AWN7-8HCA]. ↑
  12. Id.; The Rise of Artificial Intelligence and Deepfakes, supra note 9. ↑
  13. Name, Image, and Likeness: A Beginner’s Guide, NIL Network (Jan. 16, 2023), https://www.nilnetwork.com/name-image-likeness-beginners-guide/ [https://perma.cc/7EPX-2HR7]. ↑
  14. Right of Publicity, Int’l. Trademark Ass’n, https://www.inta.org/topics/right-of-publicity/ [https://perma.cc/94AX-NB92] (last visited Oct. 23, 2024). ↑
  15. NO FAKES Act of 2024, S. 4875, 118th Cong. (2024). ↑
  16. Dean, Salazar Introduce Bill to Protect Americans from AI Deepfakes, Congresswoman Madeleine Dean (Sep. 12, 2024), https://dean.house.gov/2024/9/dean-salazar-introduce-bill-to-protect-americans-from-ai-deepfakes [https://perma.cc/R9LC-8VPN]. ↑
  17. Id. ↑
  18. Fed. Trade Comm’n., .com Disclosures: How to Make Effective Disclosures in Digital Advertising 2 (2013) [hereinafter .com Disclosures]. ↑
  19. Id. at 4. ↑
  20. Id. at 5. ↑
  21. Id. ↑
  22. Id. ↑
  23. Id. ↑
  24. Id. at 6. ↑
  25. Id. ↑
  26. Id. at 8–21. ↑
  27. Id. at 8. ↑
  28. Id. at 17. ↑
  29. Id. at 19. ↑
  30. Id. at 20. ↑
  31. Id. ↑
  32. Id. at 21. ↑
  33. Id. ↑
  34. See 16 C.F.R. § 255.0 (2026). ↑
  35. Id. ↑
  36. 16 C.F.R. § 255.1 (2026). ↑
  37. Id. ↑
  38. Id. ↑
  39. Id. ↑
  40. FTC Announces Crackdown on Deceptive AI Claims and Schemes, Fed. Trade Comm’n (Sep. 25, 2024), https://www.ftc.gov/news-events/news/press-releases/2024/09/ftc-announces-crackdown-deceptive-ai-claims-schemes [https://perma.cc/XD9W-M8N9]. ↑
  41. Id. ↑
  42. Id. ↑
  43. Id.; Freshfields, FTC Cracks Down on AI Washing, Lexology: A Fresh Take (Oct. 22, 2024), https://www.lexology.com/library/detail.aspx?g=7b86c1eb-0b94-4829-8328-f94f9a803b75 [https://perma.cc/NZQ7-HUUY]. ↑
  44. Fed. Trade Comm’n, Comment on Artificial Intelligence and Copyright 5 (Oct. 30, 2023), https://www.ftc.gov/system/files/ftc_gov/pdf/p241200_ftc_comment_to_copyright_office.pdf [hereinafter FTC AI Comment]. ↑
  45. Id. ↑
  46. Id. at 5–6. ↑
  47. Id. at 6. ↑
  48. Id. ↑
  49. Id. at 7. ↑
  50. Id. ↑
  51. Id. at 8. ↑
  52. Id. ↑
  53. Id. ↑
  54. 7 Warren’s Forms of Agreements § 75.2 (2024). ↑
  55. How to Work with Artists to Promote Your Live Music Event, Eventbrite (Mar. 28, 2017) https://www.eventbrite.co.uk/blog/artists-promote-live-music-event-ds00/ [https://perma.cc/KNR2-CMTH]. ↑
  56. Craig Silverman, How to Spot a Deepfake Like the Barack Obama–Jordan Peele Video, BuzzFeed (Apr. 17, 2018) https://www.buzzfeed.com/craigsilverman/obama-jordan-peele-deepfake-video-debunk-buzzfeed [https://perma.cc/TJ4D-HKVE]. ↑
  57. FTC AI Comment, supra note 44, at 6. ↑
  58. Id. at 7. ↑
  59. Complaint at 1, Hamza v. Dudesy, LLC., No. 2:24-CV-00711 (C.D. Cal. Jan. 25, 2024). ↑
  60. Id. at 2. ↑
  61. Id. at 2, 16. ↑
  62. Id. at 2–3. ↑
  63. Id. at 3. ↑
  64. Id. at 9. ↑
  65. Winston Cho, George Carlin’s Estate Settles Lawsuit Against Podcasters Over AI Special, Hollywood Rep.: Bus. News, (Apr. 2, 2024) https://www.hollywoodreporter.com/business/business-news/george-carlins-estate-settles-lawsuit-podcasters-over-ai-episode-1235865033/ [https://perma.cc/5T4D-A8UZ]. ↑
  66. .com Disclosures, supra note 18, at 4. ↑
  67. Id. at 6. ↑
  68. Id. at 4. ↑
  69. John D. Dingell, FTC Policy Statement on Deception 2 (1983). ↑
  70. See .com Disclosures, supra note 18. ↑
  71. Id. at 6. ↑