WASHINGTON, D.C. — The Federal Trade Commission closed out the year with a sharp policy reversal on artificial intelligence enforcement while simultaneously warning consumers and companies that scams and fake reviews remain firmly in the agency’s crosshairs.
In a unanimous 2–0 vote, the FTC moved to reopen and set aside a 2024 consent order against Rytr LLC, an artificial intelligence–based writing platform. After reviewing the record, the Commission concluded the original complaint failed to meet the legal standards of the FTC Act and that the restrictions imposed on Rytr placed an excessive burden on AI innovation.
“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. He added that the Trump-Vance FTC is focused on “promoting innovation in America’s most important industries by targeting fraud and tangible consumer harm.”
The now-vacated order stemmed from allegations that Rytr’s software could be used to generate false or misleading online reviews. The consent order had barred the company from offering any AI-enabled service capable of producing consumer reviews or testimonials. Following a review conducted under President Donald Trump’s Artificial Intelligence Executive Order and America’s AI Action Plan, the FTC determined the complaint did not support a finding that Rytr violated Section 5 of the FTC Act and that maintaining the order was not in the public interest.
Rytr agreed to vacate the order and waived any procedural rights to challenge the Commission’s action.
While easing its stance on AI development, the FTC simultaneously released sobering new data on consumer fraud. According to agency analysis, consumers have reported nearly 65,000 rental scams since 2020, with total losses approaching $65 million. Many of the scams originated from fake rental listings posted on platforms such as Facebook and Craigslist.
The FTC found that about half of rental scam reports filed in the 12 months ending June 2025 traced back to fraudulent ads on Facebook. Young adults were disproportionately affected, with consumers ages 18 to 29 three times more likely than older adults to report losing money.
The scams often involve demands for upfront payments before a property is shown, pressure to submit credit score screenshots through affiliate links that trigger recurring fees, or requests for sensitive personal information that can lead to identity theft.
The agency also issued warning letters to 10 companies over potential violations of its Consumer Review Rule, which targets deceptive practices involving online reviews and endorsements.
“Fake or false consumer reviews are detrimental to consumers’ ability to make accurate and informed choices about the products they are buying – something of particular importance during the holiday season,” Mufarrige said. He emphasized that as reliance on online reviews grows, the FTC “is committed to ensuring companies comply with this Rule.”
The letters are not formal findings of wrongdoing, but they remind companies that violations can result in federal lawsuits and civil penalties of up to $53,088 per violation.
Together, the actions reflect a recalibration at the FTC: pulling back from enforcement actions seen as stifling emerging technology, while intensifying scrutiny of scams and deceptive conduct that directly harm consumers.
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