<scp>AI</scp> washing

Abstract

AI washing, the practice of misrepresenting the use or scope of artificial intelligence in goods or services to attract investors and gain competitive advantages, raises distinct regulatory challenges requiring the adaptation of traditional securities laws to novel technological contexts. This Article provides the first comprehensive comparative analysis of AI washing regulation across United States and European Union jurisdictions, and identifies fundamental differences in regulatory approaches on both sides of the Atlantic: the United States employs market‐based enforcement through existing securities laws with penalties up to $225,000, while the EU has adopted comprehensive ex ante regulation through the AI Act, with penalties up to €35 million or 7% of global turnover. Analyzing SEC enforcement actions, EU implementation patterns, and corporate governance implications, this Article demonstrates that effective AI governance requires selective convergence through alignment on key regulatory elements, rather than complete harmonization. The Article makes several original contributions in its systematic analysis of materiality standards for AI disclosures, its examination of board oversight duties for technological risks under Delaware law, its comprehensive assessment of the AI Act's corporate governance implications, and its practical recommendations for multinational compliance strategies. The regulatory frameworks developed for AI washing provide essential precedents for broader technology governance challenges, establishing principles for balancing innovation promotion with investor protection in an era of rapid technological transformation.