The CHATBOT Act prohibits AI chatbots from falsely claiming or implying that they hold professional licenses or that their advice comes from licensed professionals in regulated fields like healthcare, finance, law, and accounting. Companies deploying AI chatbots must be transparent about the AI nature of their services and cannot deceive users into thinking they are receiving guidance from actual licensed practitioners. The Federal Trade Commission will enforce the law and issue compliance guidance within 12 months, treating violations as unfair or deceptive business practices. The bill also allows states and individuals harmed by violations to file lawsuits seeking actual damages or up to $5,000 per violation (which can triple for intentional violations), with damages automatically adjusted for inflation annually. The legislation has a five-year statute of limitations for private lawsuits and preserves states' rights to enforce stronger protections under their own licensing laws.
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