Page 5 - Kattison Avenue Newsletter - Spring 2026 - Issue 16

Local Regulators Are Filling the Federal Gap

With the Consumer Financial Protection Bureau (CFPB) rolling back federal oversight, local regulators are stepping in aggressively.
The conference keynote by Michael Tiger, General Counsel of the New York City Department of Consumer and Worker Protection,
underscored that consumer protection is central to municipal affordability agendas. New York City is pursuing enforcement on junk
fees, hotel pricing transparency, predatory debt collection (through its SHIELD program) and a proposed municipal click-to-cancel rule.
Litigation activity is also picking up at the local level, with enforcement actions targeting late fees and junk fees imposed by companies
doing business in the city.

AI in Advertising

While companies continue integrating AI tools into day-to-day marketing functions at an accelerated pace, speakers noted that the legal
and regulatory landscape remains fragmented and continues to struggle to keep pace with the technology.
• Internal AI governance is non-negotiable: Companies should adopt clear internal policies governing how employees may use
generative AI (GenAI) tools, including guardrails around confidential information, consumer data, approvals and permissible use
cases. The discussion emphasized that effective policies should facilitate compliant AI use rather than simply prohibiting adoption.
• Maintain meaningful human oversight over AI-generated content and decision-making: Keeping a “human in the loop” remains
critical, particularly for advertising claims, consumer-facing content and higher-risk business decisions, because AI outputs may be
inaccurate or misleading. AI-generated content may also infringe pre-existing works or implicate personality and publicity rights,
making standard IP clearance and legal review processes just as important for AI-assisted campaigns as for traditionally created
content.

• Independently substantiate AI-generated claims and maintain supporting documentation: Companies were encouraged to
maintain evidence supporting AI-generated advertising claims and avoid relying solely on AI outputs or vendor representations, as
regulators are unlikely to treat AI use as a defense where claims are deceptive or unsupported.

• Ensure appropriate labeling, transparency and disclosure practices: AI-generated content and AI-enabled data practices may
trigger disclosure obligations under evolving US, UK and EU regulatory frameworks, particularly where consumer targeting,
personalization or synthetic content is involved.

Sustainability, Greenwashing and Made in USA Claims Face Mounting Litigation

Advertising litigation risk comes from multiple directions — the FTC, competitors via the Lanham Act, consumer class actions and the
National Advertising Division — and speakers urged brands to pick their battles wisely.
• “Made in USA” claims remain highly vulnerable to challenge:
“Made in USA” claims continue to face strict scrutiny under
the FTC’s demanding “all or virtually all” standard. Speakers
emphasized that courts remain focused on the potential for
consumer confusion regarding product sourcing, even where
certain ingredients or components are widely understood
within the industry to be unavailable from domestic suppliers
at commercial scale, such as coffee beans or cocoa. The
discussion highlighted that the practical necessity of foreign
sourcing does not eliminate litigation risk where consumers
could nevertheless interpret unqualified origin claims to
mean all significant inputs are sourced domestically. Brands
were encouraged to conduct rigorous supply chain audits,
understand the origin of all raw materials and intermediate
ingredients and use appropriately qualified claims, such as
“Assembled in USA with Foreign and Domestic Components,”
where full domestic sourcing cannot be achieved.

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