In an unusual move, the Federal Trade Commission (FTC) has reopened and set aside a previously finalized consent order against Rytr LLC, an AI-powered writing tool provider, nullifying the case against the company. The FTC's about-face decision is notable as the commissioners seek to rein in the FTC's enforcement authority by precluding enforcement theories that rely primarily on speculative downstream misuse. It is also the first FTC action to expressly rely on the Trump administration’s recent artificial intelligence (AI) executive order and accompanying AI action plan in reassessing whether the prior enforcement action continues to serve the public interest.
Background on Prior Enforcement Action
Rytr provides an AI-powered writing assistance tool that allows users to generate text based on prompts, including marketing content, product descriptions, and other written materials. In 2024, the FTC brought an enforcement action alleging that Rytr’s product could be used to generate false or misleading consumer reviews and testimonials, which could then be posted on third-party platforms.
According to the FTC’s complaint, Rytr marketed features that enabled users to generate reviews for businesses and products without requiring disclosures that the content was not based on actual consumer experiences. The FTC alleged that this functionality could facilitate deceptive practices by allowing reviews to appear authentic despite not reflecting real customer feedback. Although Rytr itself did not post reviews, the FTC framed the case in part as a "means and instrumentalities" theory, asserting that providing the tool could enable third parties to engage in deceptive conduct.
Without admitting liability, Rytr agreed to a consent order that imposed broad restrictions on its AI services. Among other things, the order prohibited Rytr from offering or promoting any AI product or service capable of generating consumer reviews or testimonials. The order also imposed ongoing compliance, recordkeeping, and reporting obligations typical of FTC settlements.
FTC’s Decision to Reopen and Set Aside Order
In December 2025, the FTC reopened the case and set aside the final order. The FTC determined that the settlement no longer served the public interest and the decisions was approved by the commissioners in a 2–0 vote, vacating the order and waiving further procedural rights.
The commission concluded that the original complaint did not adequately plead a violation of Section 5 of the FTC Act and that the remedy was not supported by the factual record. The FTC emphasized that the prior enforcement theory relied largely on the possibility that Rytr’s tool could be misused by customers, rather than on allegations that Rytr itself engaged in unfair or deceptive conduct or that consumers suffered identifiable harm. The commission also expressed concern that the order effectively barred an entire category of AI functionality despite the existence of lawful and legitimate uses for the technology.
The FTC cited the recent AI executive order and related AI action plan issued by the Trump administration directing federal agencies to review prior actions that may unnecessarily burden AI innovation. The commission explained that this directive was a relevant consideration in evaluating whether the prior consent order continued to serve the public interest.
The FTC made clear that the executive order does not eliminate the agency’s consumer protection authority or preclude enforcement involving AI tools. Rather, the commission stated that enforcement actions and remedies must be grounded in statutory authority, supported by the factual record, and proportionate to demonstrated harms, particularly in emerging technology contexts.
Applying that framework, the FTC concluded that the Rytr order imposed broad product-based restrictions without sufficient legal or evidentiary support and therefore conflicted with the executive order’s policy objectives.
Implications for Companies
The Rytr decision highlights that, at least for now, the FTC appears willing to afford AI-related businesses a relatively longer leash where alleged consumer harm is indirect, speculative, or dependent on third-party misuse. The commission made clear that AI products that enable deceptive or unfair conduct are not unlawful simply because they can be misused by some users, and that Section 5 enforcement actions must be grounded in concrete facts demonstrating actual unfair or deceptive practices rather than hypothetical downstream conduct. At the same time, the FTC emphasized that it retains full authority to pursue AI-related cases involving deception, fraud, or demonstrable consumer harm, and that the decision reflects a fact-specific reassessment of remedy and evidentiary support — not a general retreat from AI enforcement.
From a practical standpoint, companies should approach this "long leash" enforcement stance with caution. Product features and marketing materials should accurately describe intended and reasonably foreseeable uses, particularly where tools touch advertising, endorsements, or other consumer-facing representations.
Companies should also assess whether internal controls, usage restrictions, and monitoring mechanisms align with the stated use cases and documented risk assessments. Additionally, FTC enforcement priorities can shift as administrations change, and future commissions may bring actions based on conduct that occurred in prior years, even if that conduct received limited scrutiny at the time.
As the Rytr decision underscores, contemporaneous documentation around product design choices and compliance considerations may be critical where AI tools have both lawful and potentially problematic applications.
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