AI-Generated Advertisements and Corporate Liability: Who Pays When Algorithms Mislead Consumers?

ABSTRACT

Artificial intelligence (AI) has transformed the advertising industry by enabling companies to develop personalized, scalable, and data-driven ads that work effectively. Nonetheless, the emergence of AI advertisements also brings about various legal problems such as the issue of misleading claims from algorithms in ads. The growing use of AI-generated advertisements raises important questions regarding liability, particularly whether responsibility should rest with businesses, AI developers, marketing agencies, or digital platforms. The paper explores the legal position of ads created with the help of artificial intelligence, allocation of corporate liability, challenges arising from them, and recommendations made in terms of Indian legislation such as Consumer Protection Act, 2019, Information Technology Act, 2000, Digital Personal Data Protection Act, 2023, and ASCI Guidelines.