Artificial intelligence is changing how small businesses market their products and services. From social media videos to virtual spokespersons, AI-powered tools make professional-looking advertising more accessible and affordable. However, a new California law introduces important disclosure requirements.

What Does SB 1050 Require?

Effective January 1, 2027, Senate Bill 1050 requires businesses to clearly disclose when advertisements prominently feature AI-generated “synthetic performers,” including audio-only advertisements.

For example, a business using an AI-generated spokesperson to promote its services in a Facebook or Instagram video may need to disclose that the performer is artificial.

The law does not generally require disclosures simply because a business uses AI to write captions, design graphics, or enhance photographs. However, the law does require very specific disclosure language be included in any advertisement using a “prominently featured” synthetic performer.

What About Outside Marketing Agencies?

Small businesses frequently rely on marketing consultants, graphic designers, and advertising agencies to create promotional content.

Business owners should not assume that hiring an outside vendor eliminates their legal exposure. Contracts should clearly establish who is responsible for identifying AI-generated performers, reviewing advertisements, and ensuring required disclosures are included.

What Are the Potential Legal Risks?

Failure to comply with SB 1050 may constitute false advertising under California law, potentially exposing businesses to enforcement actions, financial penalties, and other legal consequences. Violations can carry civil penalties of up to $2,500 per violation (with higher penalties if targeted at seniors or disabled persons), as well as potential criminal liability.

What Should Business Owners Do Now?

Before publishing AI-generated advertising, businesses should:

• Review promotional videos and audio advertisements for synthetic performers.
• Ensure required disclosures are clear and noticeable.
• Discuss AI use and compliance responsibilities with marketing vendors.
• Consult legal counsel when questions arise.

Moving Forward with AI Responsibly

AI offers small businesses valuable marketing opportunities, but convenience does not eliminate legal responsibility. Understanding California’s new advertising requirements can help business owners embrace emerging technology while protecting their businesses.

If you have questions about SB 1050 or how California’s new advertising requirements may affect your business, contact our office for guidance on protecting your business and staying compliant. Contact Chase Law Group or call us at 310-545-7700.

Using AI in your business advertising? Make sure you’re prepared for California’s new requirements.
Contact Chase Law Group or call 310-545-7700.

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_{Please note that this article is for informational purposes only and should not be considered legal advice and does constitute an attorney-client relationship. It is recommended to consult with an attorney and your insurance carrier directly for specific guidance pertaining to your business and its practices.}