California recently enacted a series of laws designed to safeguard consumers, promote transparency and set standards for ethical AI usage. This unprecedented package addresses everything from data privacy and deepfake misuse to AI’s role in healthcare and political advertising.
As AI continues to influence how businesses operate, these laws set new benchmarks that could impact the promotional products industry.
With AI’s transformative potential for digital content and marketing, suppliers and distributors of branded merchandise need to understand how California’s rules may shape compliance standards, transparency practices and data management strategies.
“California’s new AI laws set a crucial standard for transparency and data ethics,” says Alok Bhat, market economist and senior manager of research and public affairs at PPAI. “For the promotional products industry, aligning with these rules is key to building trust and staying ahead as AI regulations expand nationwide.”
Alok Bhat
Market Economist & Sr. Manager of Research & Public Affairs, PPAI
Enhancing Transparency
SB 942 requires AI-generated content to include “provenance data,” or metadata that signals the content was created by AI. Effective in 2026, this law enables consumers and companies to identify AI-generated media more easily, setting a transparency standard.
AB 2013 mandates that AI companies disclose information about the datasets used in model training. This includes data sources, volume and whether copyrighted material was used.
- This is a significant move toward holding AI developers accountable for ethical data use.
For promo firms using AI tools to generate content, California’s laws could require new disclosures about AI content origins and data practices, making transparency a priority in client engagement.
Privacy Protections In AI-Generated Data
Expanding California’s privacy framework, AB 1008 extends the California Consumer Privacy Act (CCPA) to generative AI, ensuring that AI systems handling personal data adhere to the same privacy protections as traditional data processors.
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For promo firms using AI for customer insights, these privacy standards highlight the need for rigorous data protection practices, especially as data use regulations tighten.
Digital Identity & Deepfake Safeguards
Several new laws tackle the misuse of AI for creating deepfake content.
- SB 926 makes it illegal to distribute explicit deepfake images intended to harm.
- SB 981 requires social media platforms to establish mechanisms for reporting and removing flagged deepfakes.
- AB 1831 extends child exploitation laws to include AI-generated content, ensuring comprehensive protection against digital identity theft.
AI tools using likeness or identity data must be designed to respect user privacy and avoid unauthorized use, making responsible digital identity management critical for promo firms.
AI Use In Sensitive Sectors
Promo firms involved in markets like healthcare or politics need to ensure AI-driven marketing practices align with the following disclosure standards:
- AB 3030 mandates that healthcare providers inform patients when using AI for clinical communications.
- SB 1120 limits AI’s role in medical decision-making, ensuring that licensed professionals retain oversight.
- AI-generated political ads must include clear disclosures, as required by AB 2655, helping consumers differentiate between authentic and AI-altered political content.
Defining AI & Preparing For AI Literacy
AB 2885 establishes a formal definition of artificial intelligence in California law, which includes systems capable of making autonomous decisions based on input data.
- This definition lays the groundwork for more precise regulatory oversight.
To prepare future generations, AB 2876 and SB 1288 introduce AI literacy into school curriculums, focusing on the ethical and technical aspects of AI technology.
The move toward AI literacy and a clear regulatory framework underscores the importance of AI education within companies. Firms that invest in training employees on ethical AI use will be better positioned to meet future regulatory standards.
Anticipated Impact On The Promo Industry Nationwide
As California enforces new AI transparency and disclosure standards, branded merch providers may soon face similar requirements across other states. Aligning AI usage with these principles early can help firms prepare for multi-state compliance and build consumer trust.
With a strong emphasis on data protection, California’s AI legislation pushes firms to adopt stringent privacy practices when handling customer data. This trend may require adjustments in how customer data is managed and safeguarded, especially if similar laws are adopted nationwide.
RELATED: Illinois Signs Law Requiring Companies To Inform Employees Of AI Use
As digital likeness protections expand, promo firms using AI-driven personalization must ensure ethical practices when handling identity data. The consequences of misuse can include reputational damage and legal repercussions, making responsible management of AI tools essential.
As California pioneers AI regulation, other states are expected to follow, potentially resulting in a patchwork of AI laws across the U.S. Firms working across state lines may need to adjust their AI practices and privacy policies to meet a diverse set of requirements, preparing for potential federal standards.
As similar standards emerge nationwide, firms in the promotional products industry can benefit by adopting these best practices, enhancing consumer trust and staying ahead in a complex regulatory environment.
