Last month, the Federal Trade Commission (“FTC”) finalized a new rule prohibiting the impersonation of government and business entities.  That same day, the FTC sought comment on a supplemental notice of proposed rulemaking (“SNPRM”) to expand the rule to prohibit the impersonation of individuals and to extend liability to parties who provide the means and instrumentalities to create unlawful impersonations.  The FTC cited concerns about AI-generated deepfakes as its rationale for these actions.  FTC Chair Lina Khan stated that the proposed expansions would strengthen “the FTC’s toolkit to address AI-enabled scams impersonating individuals.”

The new rule makes “the impersonation of government, businesses, and their officials or agents in interstate commerce” an unfair or deceptive act or practice.  The rule prohibits “materially and falsely” posing as or “materially misrepresenting” affiliation with a government entity or business or its officers.  The FTC also noted that the rule would allow for civil penalties under 15 U.S.C. 45(m)(1)(A), which allows the FTC to seek civil penalties against entities that violate an FTC rule “with actual knowledge or knowledge fairly implied on the basis of objective circumstances.”  Penalties for such actions are capped at $10,000 per violation.

The SNPRM seeks comment on the FTC’s proposal to expand the newly adopted rule to prohibit impersonating individuals and to extend liability for violations of the rule to parties who “provide goods and services with knowledge or reason to know that these goods or services will be used in” unlawful impersonations.  The FTC stated that expanding the rule to cover individuals would allow the FTC to provide remedies for relationship-based scams, such as those in which bad actors pretend to be a consumer’s relative in need of money or concoct false romantic relationships to extract money or information.  The FTC stated that the proposed means and instrumentalities provision would protect consumers from parties who knew or had reason to know that their goods and services would be used for rule-violating impersonations. 

The new rule will take effect on April 1, 2024.  The comment period on the SNPRM is open until April 30, 2024.