FTC AI-washing action underscores enforcement in business-to-business context

On May 21, 2026, the Federal Trade Commission (FTC) announced its latest artificial intelligence (AI)-washing case, an action against three marketing companies that allegedly deceived consumers about an AI-powered “Active Listening” tool. By our count, this action is the thirteenth AI-washing case the FTC has filed since 2024. Of the last eight such cases, seven, including this one, involve marketing claims made to other businesses. While it is not unusual for the Commission to use its authority to protect businesses when they are acting as consumers, this series of AI-washing cases in the business-to-business context is notable. This alert discusses the case and its implications for companies marketing AI tools. 

The AI-washing allegations

In three separate complaints, the FTC alleges that a media and marketing company, CMG Media Corporation (CMG), and two smaller marketing firms with which it worked deceived small business customers through claims about its “Active Listening” tool. These companies allegedly told customers that this AI-powered tool would listen for and detect pertinent conversations from smart devices, that this voice data would be used to target ads to consumers within a specific geographic region, and that consumers had “opted in” to this use of their voice data. 

The FTC alleges that the marketing companies used no such tool, collected no voice data, and obtained no consent from consumers. Instead, the companies purportedly bought email lists from data brokers and resold them to their customers at a significant markup. The Commission alleges that these practices deceived consumers in violation of the FTC Act.

The return of means and instrumentalities

The complaints against the two smaller firms add a second deception count, alleging that they provided CMG with marketing materials that misled CMG customers about the “Active Listening” service. The count describes this conduct as the smaller firms having provided CMG with the means and instrumentalities (M&I) to deceive customers. 

While M&I doctrine is well established in FTC case law, this complaint appears to be the first FTC action to include such a count following the Commission’s rare order in December 2025 that reopened a settled AI-related matter involving Rytr LLC and vacated the earlier consent order. The December 2025 order criticized the breadth of the M&I count and set forth the Commission’s current M&I approach. It noted that one proper and traditional application is when entities provide deceptive marketing material to sellers, who then use them to deceive consumers. The CMG case thus appears to fit squarely within that traditional application of the doctrine.

The proposed orders

The proposed administrative orders against the three companies, which will now go through a public notice and comment process, require them to pay a collective total of $930,000. The Commission indicated that it would use the funds to provide redress to affected CMG customers. Given that the complaint alleges only violations of the FTC Act, the Commission would have had a limited path to such monetary relief had this matter not settled. Specifically, it would have had to obtain a final cease-and-desist order in an administrative proceeding and then file a second action in federal court to seek monetary relief.  

The proposed orders also prohibit the defendants from making any misrepresentation about the following: 

• The qualities or features of their advertising or marketing services
  
  
• The collection and use of voice data and whether consumers have provided their consent to collect, use, or disclose it 
  
  
• The geographic targeting capabilities of its services

Key takeaways

The CMG action shows again that the FTC is prepared to use its enforcement authority in cases involving businesses or individual consumers harmed by allegedly deceptive AI-related claims. In an April 2026 congressional testimony, FTC Chairman Andrew Ferguson described the FTC’s efforts in these cases as encouraging “growth in the AI market by targeting bad actors who undermine innovation through deception.” While the CMG case involves allegations of falsity, several of the FTC’s recent AI-washing cases allege that companies made marketing claims that lacked sufficient evidentiary support. No matter who is selling what to whom, companies marketing AI products are thus still encouraged to keep their claims in check.