FTC Should Protect Consumers. Not Shield AI Companies from State Oversight, CMDG Says
The Center for Media and Digital Governance (CMDG) at the Open Markets Institute today urged the Federal Trade Commission to withdraw its proposed policy statement on AI accuracy, warning that the agency is attempting to use consumer protection law to undermine state AI safeguards while advancing a legal theory that exceeds its statutory authority.
According to CMDG's filing, the FTC's proposal invents a conflict between federal consumer protection law and state AI regulations that does not exist. Instead of protecting consumers, the policy statement would make it harder for states to enforce laws promoting transparency, preventing discrimination, and holding AI companies accountable for harmful products and deceptive practices. The filing argues that the proposal closely mirrors arguments advanced by large technology companies seeking to block state AI laws.
"The FTC's job is to stop companies from deceiving their users—not to stop states from protecting them," said Karina Montoya, Program Manager for the Center for Media and Digital Governance. "This proposal invents a legal conflict that doesn't exist while making it harder for states to hold AI companies accountable. At a time when AI is reshaping nearly every aspect of our economy and democracy, we need stronger consumer protections and greater transparency—not fewer safeguards."
The filing also challenges the central premise of the FTC's proposal: that there is a single, objective standard of "accuracy" that can be imposed on AI systems. CMDG argues that generative AI outputs inevitably reflect decisions made by developers about training data, alignment, and model design. The greater threat to consumers, the filing contends, is not state oversight but the growing ability of dominant AI companies—and political actors seeking to influence them—to manipulate AI systems without meaningful transparency or accountability.
CMDG's comments argue that the FTC proposal:
Exceeds the agency's legal authority by attempting to broadly preempt state AI laws through an enforcement policy statement rather than established rulemaking or congressional authorization.
Misrepresents state AI laws that promote transparency, civil rights protections, and consumer safety by falsely suggesting they require AI systems to produce inaccurate or ideologically biased outputs.
Ignores the real risks facing consumers, including documented examples of political and corporate manipulation of AI systems and the concentration of power among a handful of dominant AI companies.
The filing concludes that the FTC should focus its enforcement efforts on addressing genuine harms from AI systems, including deceptive claims, unsafe deployment, and a lack of transparency, rather than attempting to undermine states that are acting to protect consumers in the absence of comprehensive federal AI legislation.
"The United States needs stronger oversight of AI companies, not fewer guardrails," Montoya said. "The FTC should focus on preventing deceptive AI practices and protecting consumers instead of making it harder for states to do the same."
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The Center for Media and Digital Governance (CMDG) at the Open Markets Institute investigates concentrated power over digital infrastructure, AI systems, and information markets through research, convening, and advocacy. We develop policy frameworks promoting democratic governance and serving the public interest rather than private gatekeepers. Learn more and sign up for updates at www.cmdg.tech and follow our Information & Power Substack here.