This website uses cookies. By using this website, you agree to our Cookie Policy.
Artificial Intelligence, Real Liability: The Legal Risks of “AI-Washing”
Reprinted from: AI Journal | 07/28/2025Cadwalader partners Tom Grodecki and Danielle Tully authored a recent AI Journal article examining the rising legal and regulatory risks of “AI-washing”—misrepresenting the use or capabilities of AI in products and services.
They note a sharp uptick in AI-related securities litigation, with misstatements about AI now central to class actions against companies like Tesla and Innodata. With U.S. filings more than doubled from 2023 to 2024, the FCA has warned that misleading AI claims may fall under existing market abuse rules. Additionally, the SEC recently expanded its Crypto Assets and Cyber Unit to include AI-related enforcement.
To mitigate risk, Tully and Grodecki recommend stronger AI governance, including board oversight, disclosure controls, usage mapping, and internal AI glossaries.
Read the full article here.
