Businesses advertising in New York now face a new compliance requirement as artificial intelligence rapidly changes the marketing industry. Starting Tuesday, companies must clearly disclose when an advertisement uses an AI-generated person instead of a real actor, under what Governor Kathy Hochul’s office calls a first-in-the-nation law aimed at increasing transparency in advertising.

The law requires a conspicuous label whenever an ad features what New York legally defines as a “synthetic performer.” The state describes that as digitally created media designed to appear as a real person. According to Hochul’s office, the rule applies across virtually all advertising formats, including television, social media, streaming services, websites, and digital advertising.

The goal is simple: consumers should know whether the person promoting a product is real or computer-generated.

For businesses, the stakes are financial. Companies that fail to disclose the use of AI-generated people face civil penalties of $1,000 for a first violation and $5,000 for each subsequent violation. Responsibility falls on both brands and the agencies producing advertisements, meaning companies cannot simply outsource compliance to vendors.

The legislation, known as S.8420-A / A.8887-B, was sponsored by State Senator Joseph Addabbo Jr. and signed into law on December 11, 2025. Lawmakers provided a 180-day implementation period before the rule officially took effect.

The law arrives as AI tools rapidly transform advertising. AI video platforms can now generate realistic people in minutes, allowing advertisers to reduce costs associated with hiring actors, booking studios, and producing traditional commercials.

Importantly, New York is not banning the use of AI-generated people in advertising. Instead, it is requiring advertisers to disclose when they are using them.

That distinction sits at the center of a broader debate within the advertising and entertainment industries.

One of the law’s strongest supporters was SAG-AFTRA, the union representing actors and performers. The organization has spent the past several years pushing for protections against the replacement of human performers with digital replicas and AI-generated substitutes. Supporters argue consumers deserve transparency while performers deserve safeguards against being displaced by technology.

The advertising industry opposed the measure.

The American Association of Advertising Agencies (4As) warned lawmakers that the law could create compliance challenges and additional burdens for advertisers and agencies operating in New York. Industry groups argued that AI is becoming a standard creative tool and that additional disclosure requirements could slow innovation and increase costs.

Broadcasters also raised concerns during the legislative process. The New York State Broadcasters Association said it appreciated amendments that narrowed portions of the bill but remained concerned that the definition of a synthetic performer could be interpreted too broadly.

Lawmakers included several notable exceptions.

The disclosure requirement does not apply to advertisements promoting movies, television programs, streaming content, or video games when the AI-generated character is part of the content being advertised. Audio-only advertisements are also exempt, as is the use of AI solely to translate a real performer’s speech into another language.

For businesses, the practical work begins immediately.

Law firms including Manatt, Phelps & Phillips and Davis+Gilbert have advised clients to review advertising workflows, examine content supplied by outside agencies, and confirm whether AI-generated performers are being used before campaigns launch. The guidance reflects a growing concern that many brands may not always know when vendors have incorporated AI-generated people into creative projects.

The law also adds another layer to an increasingly complex regulatory environment. States including California, Illinois, and Tennessee have enacted or expanded laws governing AI-generated likenesses and digital replicas, creating a patchwork of requirements for companies operating nationally.

For now, any business advertising to New York’s nearly 20 million residents faces a straightforward question before an ad goes live: Is the person on screen real? If not, New York law now requires consumers to be told.

The bottom line: New York’s new disclosure law does not prohibit AI-generated actors, but it does require transparency. As AI becomes a larger part of advertising, companies will need to balance technological efficiency with growing regulatory scrutiny.

JBizNews Desk — New York

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