California has enacted what will no doubt be the most consequential AI disclosure law in the United States, especially if “consequential” is measured in potential monetary impact to brands using AI in their advertising. The law, SB 1050, which Governor Newsome signed September 17 and which would go into effect January 1, 2027, resembles the New York law that went into effect earlier this summer in that it requires advertisements featuring AI-generated “synthetic performers” to clearly and conspicuously disclose this fact.  The two laws similarly define a  “synthetic performer” as an AI-created performer that appears to be a realistic human (and not, e.g., a cartoon person or an anthropomorphized pickle) who is not recognizable as an existing person (i.e., a deepfake).  But there are material differences.  The California law is theoretically narrower in that it is limited to when a synthetic performer is “prominent,” defined as “any of the following: (A) In the foreground and demonstrating or illustrating the product or service; (B) Providing or voicing the on- or off-camera narration or commercial message; [or] (C) Illustrating or reacting to the on- or off-camera narration or commercial message.”  Of note, this makes the California law also broader than the New York law in one respect—it applies to audio voiceovers and narrations, even when there is no AI-generated visual.  

The California provides slightly more guidance as to the wording of the disclosure, allowing some discretion but providing that it must be “substantially similar to ‘this performance features a synthetic performer’ or ‘no human performer is depicted.’”  The law also exempts advertisements for expressive works such as movies and video games, “provided that the use of a synthetic performer in the advertisement or promotional material is consistent with its use in the expressive work.”

The most important difference is that while the California law does not impose fixed statutory penalties, it does provide a private right of enforcement, establishing that “A violation of this section constitutes a violation of Section 17500 [California’s false advertising law] and may be enforced pursuant to Chapter 5 (commencing with Section 17200) of Part 2 [California’s unfair competition law].”  There is no reason to assume that this provision does not allow for class actions.  An important question left unanswered is what would be the monetary remedy in the event of a class action.  Ordinarily, in consumer advertising class actions, plaintiffs posit an overcharge or “price premium,” asserting, and ultimately attempting to quantify through an expert witness, that the defendant can and does charge more in the marketplace for a product with whatever claim—say, “no artificial preservatives”—is contested.  While this premise is often dubious, and courts have been accepting scientifically shaky evidence of the existence of a price premium for the sake of keeping the bar to consumer class certification low, it is at least superficially plausible that promoting certain features of a product might impact pricing.  This is not as true of whether the performer promoting the product is real or synthetic, just as it has not been true of things such as failure to disclose compensation to paid influencers and endorsers, which have not spawned waves of class action litigation even though the practice is widespread and deceptive under general consumer protection laws.  If the California plaintiff’s bar, which is always looking for new revenue sources, can come up with an injury or damages theory that persuades a few judges, this law could create a new growth area for class action litigation.  Even if this doesn’t happen, brands in 2027 should be prepared for private enforcement for injunctive relief, accompanies by a monetary demand commensurate with what the defendant might spend through the early stages of litigation.