Glossary · Compliance

AI Disclosure

AI disclosure is the legal and ethical obligation to tell users they are interacting with AI. Definition, applicable laws, and SMB practical guidance.

By Kadin Nestler · May 28, 2026 · Updated May 28, 2026
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Where disclosure is legally required

  • EU AI Act (Article 50) — chatbots must disclose AI; AI-generated media must be labeled; emotion recognition systems must inform users.
  • California SB 1001 (Bot Disclosure Law) — bots used to incentivize purchases or influence votes must disclose.
  • Colorado AI Act — consumer-facing AI for consequential decisions requires notice.
  • Utah AI Policy Act — generative AI services must disclose when asked.
  • Bar association rules — many state bars now require attorneys to disclose AI use in client work.

What good disclosure looks like

Plain language, presented upfront. "Hi, this is the AI assistant for [Business Name]. I can help with [X, Y, Z]. To reach a human, say 'representative' or press 0." For text: "Note: This conversation is handled by an AI assistant." For AI-generated marketing content (images, copy): a small but visible label. The disclosure should not require the user to find it in a privacy policy footer.

Sector-specific disclosure expectations

  • Healthcare — disclose AI-assisted clinical decision support to patients per state telehealth rules.
  • Legal — ABA Formal Opinion 512 requires lawyers to consider client disclosure of AI use.
  • Financial services — SEC and FINRA expect advisor disclosure of AI used in advice.
  • Employment — Colorado AI Act requires notice when AI is used in consequential employment decisions.
  • Education — emerging state rules require disclosure of AI in K-12 grading or admissions.

Practical defaults for SMBs

Disclose AI use on every AI-driven inbound channel (voice, chat). Label AI-generated marketing materials when the labeling does not undermine the value. Document your AI use in customer-facing notices. The cost of over-disclosure is near zero; the cost of under-disclosure is regulatory exposure plus reputational risk if a customer feels misled.

What it means for your business

Disclosing AI on customer-facing surfaces costs nothing and protects you from rapidly multiplying state-level disclosure laws. Default to "yes, this is AI" and move on.

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