Government Report - September 2026
September 2026 Report
AI transparency, youth privacy and consumer data protections dominated September’s legislative updates. From new disclosure requirements for AI-generated performers to proposed restrictions on targeted advertising and personalized pricing, AAF continues to advocate for policies that protect consumers while supporting innovation and responsible advertising practices.
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Federal Activity
Federal regulatory and legislative bodies intensified their focus on the advertising industry throughout August and September 2026, specifically targeting artificial intelligence applications and youth data protections.
U.S. Congress
The House is considering a new bipartisan bill similar to the Senate’s stalled Kids Off Social Media Act. The 16 & Up Social Media Act, would prohibit companies from using algorithmic “targeting” on users under 17. Meanwhile, on August 5th, the Senate Commerce Committee advanced a major legislative package containing the Kids Online Safety Act (KOSA) and the Children and Teens' Online Privacy Protection Act (COPPA 2.0). If passed by the full Congress, COPPA 2.0 would fundamentally alter digital marketing by extending strict privacy rules to teens under 18 and completely ban the use of personal data for individual-specific, targeted advertising directed at minors.
While federal discussions around data and ad taxes remained stalled in favor of state-level tax initiatives, this sweeping federal push for AI transparency and data minimization ensures that the programmatic advertising landscape faces an era of much tighter regulatory compliance.
Federal Agencies
On August 19th, the Federal Trade Commission (FTC) introduced a groundbreaking proposed enforcement policy addressing AI-driven personalized pricing. This specific federal policy warns brands that leveraging automated profiling to dynamically alter product prices without explicit disclosures constitutes an illegal trade practice. AAF submitted comments on the proposal, highlighting its potential effects on the advertising industry.
Meanwhile, federal agency oversight hit a milestone on August 27, 2026, when the FTC finalized a $930,000 settlement with Cox Media Group and two marketing firms over deceptive "Active Listening" AI claims. The agency alleged these companies misled advertising clients by falsely promising an algorithmic service could capture live smart-device conversations for hyper-localized ad targeting.
State Activity
Late summer brought the most consequential stretch of the 2025–2026 state legislative cycle for our industry. Delaware enacted a significant privacy-law update, and California's Legislature closed its two-year session on August 31 by sending a wave of AI-, advertising-, and data-privacy bills to Governor Newsom's desk. Several other bills stalled in committee or died when their sessions adjourned. Below is a summary of what happened, what's pending, and what to watch in the weeks ahead.
Signed Into Law
California: AI “Performers” in Ads On September 16, Governor Gavin Newsom signed into law a bill requiring a "clear and conspicuous disclosure" whenever an ad prominently features an AI-generated "synthetic performer" — a digital figure that gives the realistic impression of a human performance without representing an identifiable real person. The new law closely mirrors New York's new law, which went into effect on June 9, and which similarly requires advertisers to disclose the use of digitally created "synthetic performers" in ads. Both laws exempt expressive works, like films and video games, when the performer's use matches his or her role in the underlying work. The key difference: New York's duty kicks in when the advertiser has actual knowledge a synthetic performer is used, while California's version drops that knowledge qualifier. Read the industry coalition response here.
Delaware: HB 380 Delaware Personal Data Privacy Act (DPDPA)
Amendments (signed 9/2/2026, effective 1/1/2027).
The bill significantly tightens state privacy rules, forcing the advertising industry to change how it handles consumer data, vendor contracts, and tracking tools.
New Jersey: Anti-Surveillance Pricing Enacted
Bill & Status: Assembly Bill 4085 (The "Fair Price Protection Act")
Final Action: Enacted and approved into law on July 23, 2026.
Impact on Advertisers: This law explicitly prohibits businesses from using a consumer's automated or personal data—such as precise geolocation data or specific purchase history—to dynamically alter or differentiate grocery prices through automated retail systems. It mandates a strict one-year moratorium on installing new electronic shelving labels pending a state-led economic study. Standard promotional loyalty programs remain permissible provided clear and conspicuous disclosures are extended to consumers.
Hawaii: Strict New Protections Against Unauthorized AI Replicas & Companions
Bill & Status: House Bill 2137 (Act 247) and Senate Bill 3001 (Act 248)
Final Action: Both pieces of legislation were signed into law by the Governor on July 14, 2026.Impact on Advertisers (HB 2137): This statute directly outlaws the intentional publication or generation of realistic, AI-generated digital likenesses or voice imitations of individuals within commercial advertising campaigns without express, written consent. It establishes explicit civil remedies and statutory damages for affected parties, though it carves out explicit protections for media platform hosts and traditional parodies.
Impact on Advertisers (SB 3001): Imposes stringent disclosure requirements on AI "companion" platforms. The law forces platforms to issue persistent notices to minor users ensuring they understand they are talking to software, while simultaneously banning platforms from using minor behavioral patterns to deliver targeted commercial advertisements.
Sent to the Governor for Signature/Enactment
California
The California Legislature adjourned for the year on August 31. Governor Newsom now has until September 30, 2026, to sign or veto every bill in his possession — making the next two weeks the most important compliance-planning window of the year for members doing business in California. Key advertising- and AI-related bills awaiting action:
AB 1542 — Sensitive Personal Information. AAF also joined industry partners in a letter requesting that the Governor veto AB 1542, which bars businesses, service providers, and contractors from selling or sharing sensitive personal information (precise geolocation, SSNs, health data).
AB 883 — Data Broker Deletion Timeline. AAF joined others in the industry in a letter asking the CA legislature to consider amendments to this bill. It would shorten the data-broker deletion-request response window from 45 to 30 days and expands Attorney General/local enforcement authority, effective 7/1/2027. As of this writing Governor Newsom has yet to sign or veto the bill.
SB 1000 — California AI Transparency Act Update. Broadens the existing AI Transparency Act to cover all public-facing generative AI creators, removes prior user-count thresholds, refines AI-content disclosure rules, and delays compliance to 2029 for assistive technology.
AB 2564 — "Surveillance Pricing" Ban. Prohibits using personal data and AI to charge different consumers different prices for the same goods and voids related consumer waivers; passed the Assembly 22-14 and awaits final concurrence before enrollment.
AB 2561 — Privacy Settings Protection. Prohibits operating systems and apps from resetting a user's privacy settings to a less-protective default without explicit permission.
SB 923 — California Consumer Privacy Act (CCPA) Deletion Rights Expansion. Expands consumer deletion rights under the CCPA to cover all personal data a business holds, including third-party data, while preserving legal/security exceptions.
AAF Recommendations & Next Steps
Auditing Dynamic Pricing Adjustments: Compliance units must review algorithmic matrices in light of New Jersey’s enacted ban and California's pending surveillance pricing rules.
AI Asset Review: Ensure that all programmatic creative or localized promotional campaigns running within Hawaii do not integrate synthetic replicas of human figures without executing standalone disclosure parameters and signed likeness waivers.
The AAF protects and promotes advertising at all levels of government through grassroots activities. Our nationwide network monitors advertising-related legislation on local, state, and federal levels. We put our members face-to-face with influential lawmakers while encouraging self-regulation as a precursor to government intervention, when appropriate, of course. Feel free to reach out with any questions or concerns. To learn more about our national advocacy efforts, click here.
