When AI Marketing Crosses the Line: The FTC’s Warning to Businesses

The Federal Trade Commission (FTC) has made clear that long-standing rules against deceptive advertising apply with full force to artificial intelligence products. In August 2025, the FTC entered into a consent order with Workado, an AI software company, after finding that the company misled customers by exaggerating the accuracy of its AI detection tool. This enforcement action is a warning to AI companies, as well as to any business using or reselling AI products, that boastful marketing claims can trigger regulatory scrutiny and legal liability.

The Workado Case

Workado promoted an AI detection tool that it claimed was 98 percent accurate in identifying whether the text was AI-generated. The problem was that the company primarily trained and validated its model on academic writing, rather than on the wide range of texts its customers actually used the tool to evaluate. When applied outside of educational contexts, the tool’s performance fell sharply—dropping to approximately 53 percent accuracy, which the FTC described as “no better than a coin toss.”

By suggesting the tool worked reliably across all contexts, Workado overstated its capabilities and misled customers. The FTC held that this constituted a deceptive practice under Section 5 of the FTC Act.

What the FTC Required

The final order against Workado requires the company to:

• Stop making accuracy or performance claims unless supported by “competent and reliable evidence.”

• Retain testing and validation data to substantiate future claims

• Notify affected customers about the inaccuracies and the settlement

• File compliance reports with the FTC for four years

Compliance Takeaways for Businesses Using AI

For companies adopting AI tools, the Workado order is a reminder that due diligence matters. Vendors’ marketing materials should never be taken at face value. Independent testing, pilot projects, and third-party reviews can reveal whether a product truly delivers as promised.

If your business markets AI services directly, link any claims about accuracy or efficiency to data you can prove. Broad statements without measurable support increase both legal and reputational risk. Document your evaluation process and keep records of performance testing so you can respond if a regulator or client asks for substantiation.

Education is equally important. Sales, recruiting, and compliance staff should understand what an AI tool can and cannot do, so they avoid overstating results in conversations with customers. Companies should also prepare for questions from regulators or sophisticated clients. Having a ready file of validation data and known limitations can turn scrutiny into an opportunity to demonstrate credibility.

Broader Implications for Florida Businesses

Florida employers are increasingly adopting AI to streamline HR, compliance, and marketing.

The FTC’s action demonstrates that it is not enough to rely on vendor assurances about performance. Florida businesses should verify claims, insist on documentation, and train staff to present AI capabilities accurately. Oversight should be treated as part of sound business practice, not just regulatory compliance.

Conclusion

The Workado consent order is more than a single enforcement action. It is a clear warning that regulators are watching AI advertising closely. Businesses should assume that every claim about accuracy, reliability, or performance will be scrutinized. By grounding marketing in evidence and transparency, companies can reduce regulatory risk while strengthening customer trust.