FTC Reopens and Vacates Rytr Consent Order Over AI Innovation Concerns

USA: FTC Reopens and Vacates Rytr Consent Order Over AI Innovation Concerns

A federal agency has moved to overturn a 2024 consent order against Rytr LLC, stating that the original complaint failed to satisfy the legal standards of the FTC Act and that the order placed an undue burden on emerging artificial intelligence innovation. The decision follows a review of the Trump administration’s Artificial Intelligence Executive Order and America’s AI Action Plan.

Background of the 2024 Consent Order

The 2024 final consent order alleged that Ryry’s AI‑enabled writing assistance service allowed subscribers to generate false and deceptive online reviews, a practice the FTC deemed a violation of Section 5 of the FTC Act. Among other conditions, the order prohibited Ryry from offering any AI‑driven service that could produce consumer or customer testimonials.

FTC’s Review Findings

In its reassessment, the Commission concluded that the factual allegations in the original complaint did not adequately support a claim of Section 5 violations. Moreover, the agency determined that enforcing the order would impede innovation within the nascent AI sector, contrary to the policy objectives outlined in the administration’s AI directives.

Official Statements

“Condemning a technology or service simply because it potentially could be used in a problematic manner is inconsistent with the law and ordered liberty,” said Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection. “The Trump‑Vance FTC is focused on promoting innovation in America’s most important industries by targeting fraud and tangible consumer harm.”

Procedural Outcome

Rytr consented to vacate the order and waived any rights it might have under Rule 3.72(b) of the Commission’s Rules of Practice. The vote to reopen and set aside the final decision was 2‑0.

Future Enforcement Outlook

The FTC emphasized that it will continue to hold accountable actors who use AI to violate the law or deceive consumers about the capabilities of generative AI. However, the agency indicated that the Rytr case did not meet the threshold for such enforcement.

Implications for AI Regulation

This action illustrates the FTC’s intent to balance consumer protection with the promotion of technological advancement, signaling a cautious approach to imposing restrictions that could hinder AI development.

This report is based on information from FTC, licensed under Public Domain (U.S. Government Work). Source: Official U.S. Government release.