To require a covered tool to disclose when the covered tool provides sponsored content, and for other purposes.

To require a covered tool to disclose when the covered tool provides sponsored content, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. Short title.

SEC. 2. Disclosure requirements; prohibitions.

(a) Mandatory disclosure requirements.—

(1) IN GENERAL.—A covered entity shall disclose when the response of a covered tool—

(A) mentions, recommends, presents, or favorably mentions a product, service, or entity pursuant to a commercial arrangement, regardless of whether the user explicitly requested a product recommendation;

(B) is general in nature and influenced by a commercial arrangement, including through a brand-specific mention, ranking, or omission embedded within advice, how-to, or informational response not framed as product queries;

(C) is generated using a system prompt, retrieval-augmented generation source, or fine-tuning data that has been provided or funded by a third party under a commercial arrangement; or

(D) contains an affiliate link or referral code, whether embedded or appended.

(2) FORMS OF DISCLOSURE.—A disclosure under paragraph (1) shall be as follows:

(A) Clear and conspicuous, visible without scrolling, in plain language, and provided with or before the display of relevant content.

(B) Identify the specific nature of the relationship (such as a paid promotion, sponsored, or affiliate partnership).

(C) Retained if the conversation is saved, exported, or shared.

(D) Not obscured by design, color, font size, or placement.

(E) With regard to a voice-based covered tool, delivered without any audio effect that reduces salience (such as a lower volume or pitch shift).

(b) Prohibited practices.—A covered entity may not allow a covered tool to do the following:

(1) Instruct an AI system to deny being AI or be in a commercial relationship, when directly asked.

(2) Use design patterns that obscure or minimize required disclosures.

(3) Present sponsored content as the product of organic AI reasoning when the content is not.

(c) Operator obligations.—

(1) COMMERCIAL ARRANGEMENT REGISTRY REQUIRED.—A covered entity shall maintain an internal registry of each third-party commercial arrangement that influences AI-generated content, updated in real time.

(2) REQUIREMENT TO CONFIRM COMMERCIAL ARRANGEMENT.—A covered entity shall provide a user with the ability to ask, in a given session or conversation, whether any response the user received was subject to a commercial arrangement.

(d) FTC rulemaking authority.—Not later than 180 days after the date of the enactment of this Act, and every 3 years thereafter (to account for changes in AI technology), the Commission shall issue regulations, under section 553 of title 5, United States Code, as the Commission determines necessary to carry out the provisions of this Act.

(e) Enforcement by Federal Trade Commission.—

(1) UNFAIR OR DECEPTIVE ACTS OR PRACTICES.—A violation of this section or a regulation promulgated under this section shall be treated as a violation of a regulation under section 18(a)(1)(B) of the Federal Trade Commission Act (15 U.S.C. 57a(a)(1)(B)) regarding unfair or deceptive acts or practices.

(2) POWERS OF COMMISSION.—The Federal Trade Commission shall enforce this section and any regulation promulgated under this section in the same manner, by the same means, and with the same jurisdiction, powers, and duties as though all applicable terms and provisions of the Federal Trade Commission Act (15 U.S.C. 41 et seq.) were incorporated into and made a part of this section. Any person who violates this section or a regulation promulgated under this section shall be subject to the penalties and entitled to the privileges and immunities provided in the Federal Trade Commission Act.

(f) Actions by States.—

(1) IN GENERAL.—In any case in which the attorney general of a State, or an official or agency of a State, has reason to believe that an interest of the residents of such State has been or is threatened or adversely affected by an act or practice in violation of this section or a regulation promulgated under this section, the State, as parens patriae, may bring a civil action on behalf of the residents of the State in an appropriate State court or an appropriate district court of the United States to—

(A) enjoin such act or practice;

(B) enforce compliance with such subsection or such regulation;

(C) obtain damages, restitution, or other compensation on behalf of residents of the State; or

(D) obtain such other legal and equitable relief as the court may consider to be appropriate.

(2) NOTICE.—Before filing an action under this subsection, the attorney general, official, or agency of the State involved shall provide to the Federal Trade Commission a written notice of such action and a copy of the complaint for such action. If the attorney general, official, or agency determines that it is not feasible to provide the notice described in this paragraph before the filing of the action, the attorney general, official, or agency shall provide written notice of the action and a copy of the complaint to the Federal Trade Commission immediately upon the filing of the action.

(3) AUTHORITY OF FEDERAL TRADE COMMISSION.—

(A) IN GENERAL.—On receiving notice under paragraph (2) of an action under this subsection, the Federal Trade Commission shall have the right—

(i) to intervene in the action;

(ii) upon so intervening, to be heard on all matters arising therein; and

(iii) to file petitions for appeal.

(B) LIMITATION ON STATE ACTION WHILE FEDERAL ACTION IS PENDING.—If the Federal Trade Commission or the Attorney General of the United States has instituted a civil action for violation of subsection (a) or a regulation promulgated under such subsection (referred to in this subparagraph as the “Federal action”), no State attorney general, official, or agency may bring an action under this subsection during the pendency of the Federal action against any defendant named in the complaint in the Federal action for any violation of such subsection or regulation alleged in such complaint.

(4) RULE OF CONSTRUCTION.—For purposes of bringing a civil action under this subsection, nothing in this section may be construed to prevent an attorney general, official, or agency of a State from exercising the powers conferred on the attorney general, official, or agency by the laws of such State to conduct investigations, administer oaths and affirmations, or compel the attendance of witnesses or the production of documentary and other evidence.

(g) Private right of action.—

(1) IN GENERAL.—A person injured by an act or practice in violation of this section or a regulation promulgated under this section may bring in an appropriate State court or an appropriate district court of the United States—

(A) an action to enjoin the violation;

(B) an action to recover damages for actual monetary loss from the violation, or to receive up to $1,000 in damages for each such violation, whichever is greater; or

(C) both such actions.

(2) WILLFUL OR KNOWING VIOLATIONS.—If the court finds that the defendant acted willfully or knowingly in committing a violation described in paragraph (1), the court may, in its discretion, increase the amount of the award to an amount equal to not more than 3 times the amount available under paragraph (1)(B).

(3) COSTS AND ATTORNEY’S FEES.—The court shall award to a prevailing plaintiff in an action under this subsection the costs of such action and reasonable attorney’s fees, as determined by the court.

(4) LIMITATION.—An action may be commenced under this subsection not later than 2 years after the date on which the person first discovered or had a reasonable opportunity to discover the violation.

(5) NONEXCLUSIVE REMEDY.—The remedy provided by this subsection shall be in addition to any other remedies available to the person.

(h) Definitions.—In this section:

(1) AI.—The term “AI” has the meaning given that term in section 5002 of the National Artificial Intelligence Initiative Act of 2020 (15 U.S.C. 9401).

(2) AI CHATBOT.—The term “AI chatbot” means any software system that uses a large language model or similar technology to generate conversational responses to user queries that is made available to the public.

(3) COMMERCIAL ARRANGEMENT.—The term “commercial arrangement” means an exchange of money, data, preferential access, or other consideration that influences the content of an AI-generated response.

(4) COVERED ENTITY.—The term “covered entity” means any person, company, or organization that deploys or operates a covered tool for consumer-facing use with more than 50,000 monthly active users.

(5) COVERED TOOL.—The term “covered tool”—

(A) means an AI interactive computer service or software application that—

(i) generates responses that are not fully predetermined; and

(ii) accepts open-ended natural-language or multimodal user input and produces adaptive or context-responsive output; and

(B) includes an AI chatbot and a generative search synthesis feature.

(6) GENERATIVE SEARCH SYNTHESIS FEATURE.—The term “generative search synthesis feature”—

(A) means any feature of an online search engine or information-retrieval service that uses a large language model or similar technology to produce, in response to a search by the user, a synthesized narrative answer, summary, or recommendation that is displayed to the user in lieu of, or more prominently than, the ranked list of hyperlinks to third-party sources that the service would otherwise return; and

(B) includes any feature that generates the answer, summary, or recommendations described in subparagraph (A) automatically as part of a standard results page, regardless of whether the user separately requested a summary and whether source citations accompany the generated output.

(7) SPONSORED CONTENT.—The term “sponsored content” means an AI-generated response that—

(A) mentions, recommends, or promotes a specific product, service, or entity; and

(B) is produced in whole or in part due to a commercial arrangement between the covered entity and a third party.

(8) STATE.—The term “State” means each of the several States, the District of Columbia, each commonwealth, territory, or possession of the United States, and each federally recognized Indian Tribe.

(9) VOICE-BASED COVERED TOOLS.—The term “voice-based covered tools” means a covered tool that delivers responses primarily through AI-generated speech.

(i) Relation to other laws.—

(1) RULE OF CONSTRUCTION.—Nothing in this section may be construed to limit the authority of the Commission, the Federal Communications Commission, or State consumer protection agencies.

(2) PREEMPTION.—This section does not preempt a State law that provides greater consumer protection related to a covered tool.

(j) Effective date.—This section shall take effect 12 months after the date of the enactment of this section.