Increasing focus on ‘AI washing’

From the illusion of autonomy to the demand for verifiable performance, AI systems are increasingly defined not by what they claim to do, but by what they can prove.  In recent years, companies have increasingly promoted their products and services as AI powered, which has given rise to a growing number of so called ‘AI washing’ lawsuits. 

‘AI washing’ can be understood as the strategic overstatement or misrepresentation of artificial intelligence capabilities in products, services, and organizational narratives. At its core, it constructs an illusion of autonomy, when in practice they may depend on conventional software, manual processes, or extensive human labor.

AI washing occurs when companies use misleading marketing practices to exaggerate the capabilities or sophistication of their technology, thereby creating a false impression of advanced AI-driven innovation. By promoting systems as more advanced or intelligent than they are, companies can create unrealistic expectations among consumers, investors, and regulators. Such practices risk weakening public confidence in AI technologies. Because user perceptions are often shaped by everyday tools such as mobile shopping apps, demographic differences play a significant role in the formation of misplaced trust. Consequently, establishing clear transparency is essential to ensure that consumers can make informed assessments of AI technologies.

According to the EU Artificial Intelligence Act, AI systems may operate with varying degrees of autonomy, enabling them to act and make decisions with limited or no direct human supervision. In essence, such systems can perform tasks and navigate complex environments independently, thereby substantially reducing the need for continuous human intervention. For regulatory compliance, this operational independence fundamentally shifts corporate liability: businesses can no longer evaluate AI as a static, fully predictable software tool.

Regulators are starting to demand hard evidence by strict AI-washing disclosure obligations. Companies making AI-related claims to investors and consumers are increasingly expected to substantiate those statements throug  assurance and audit mechanisms to demonstrate that the technology genuinely exists, performs as represented, and has a measurable impact on business operations and performance.

Internationally, EU’s AI Act is widely described as setting a global benchmark against AI-washing. In USA, there are state‑level initiatives such as Texas’ TRAIGA and California’s SB 53.

​In the UK, the DMCC Act 2024  allows fines of up to 10% of global turnover. In the UAE, initiatives such as Dubai’s “AI Seal” create reputational enforcement mechanisms. In East Asia, regulators such as Taiwan’s Fair Trade Commission treat deceptive AI-powered claims as false or misleading advertising.

To reduce the risk of AI washing and ensure compliance with emerging regulatory standards, organizations should adopt clear internal governance measures regarding the development, classification, and communication of AI systems. Effective governance requires transparency not only in the technical functioning of AI systems, but also in how these systems are presented to consumers, investors, and regulators.

A more comprehensive article on this topic can be seen here.

For further information or/and assistance concerning ‘AI washing’, please contact Joy.Haggenburg@nemko.com or

Alicja.Halbryt@nemko.com

(This article is based on an article provided by Nemko Digital; edited by T.Sollie)