FTC “Means and Instrumentalities” Liability Take a Hit

The Federal Trade Commission utilizes a number of remedial theories when attempting to hold a bad actor liable for the actions of a third party.  One such theory is known as “means and instrumentalities” liability, where a bad actor can potentially be liable if it provides others with the “means and instrumentalities” for engaging in unfair or deceptive conduct.

A recent legal matter may have just significantly limited the situations where the use of means and instrumentalities liability may be deemed acceptable.

Background

In December 2025, the Federal Trade Commission announced that it had reopened and set aside a 2024 final order against Rytr LLC in response to the Trump Administration’s AI Action Plan.  The FTC issued an order after it determined that the complaint failed to satisfy the legal requirements of the FTC Act and that the order unduly burdens artificial intelligence innovation in violation of the Trump Administration’s Artificial Intelligence Executive Order and America’s AI Action Plan.

“Condemning a technology or service simply because it potentially could be used in a problematic manner is inconsistent with the law and ordered liberty,” said FTC attorney Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection.  “The Trump-Vance FTC is focused on promoting innovation in America’s most important industries by targeting fraud and tangible consumer harm.”

In July 2025, the White House released the AI Action Plan which outlined 90 federal AI policy actions.  The AI plan set forth instructions for different agencies, including the Federal Trade Commission with respect to enforcement of AI-related marketing claims.  In short, the Action Plan is consistent with President Trump’s deregulation priorities and includes modifying or setting-aside any orders that unduly burden AI innovation.

Rytr Consent Order

The 2024 final consent order against Rytr settled allegations that the company’s artificial intelligence-enabled writing assistance service allowed subscribers to generate false and deceptive online reviews in violation of FTC Act.  According to the complaint, by offering this tool, Rytr gave its customers the “means and instrumentalities” to deceive people.  The final consent order, among other conditions, banned Rytr from providing any AI-enabled service generating consumer or customer reviews or testimonials.

After reviewing the final order in response to President Trump’s AI Action Plan, the FTC found that the facts alleged in the complaint fail to support allegations that Rytr violated Section 5 of the FTC Act and that, because the order unduly burdens innovation in the nascent AI industry, it is in the public interest to set it aside.

“The FTC will continue to hold accountable actors that use AI to violate the law or deceive consumers about the capabilities of their generative AI.  However, that is not the case here with Rytr,” according to the FTC.

Dissenting Opinion

A joint dissent was issued by then-Commissioner Holyoak and Ferguson.  Both voted against the final order and raised myriad concerns about the allegations against Rytr.  For example, they asserted that the conduct alleged in the FTC’s complaint did not constitute an unfair business practice because there was no allegation of actual injury, only allegations of potential injury.

The joint dissent also took aim at the FTC’s use of “means and instrumentalities” liability.  Specifically, the dissenters asserted that the complaint against Rytr contained no allegation that the company itself made any misrepresentations, much less misrepresentations or anything else inherently deceptive that could be used by others as the means to deceive consumers.  Consequently, according to the joint dissent, the use of means and instrumentalities liability was inappropriate under the circumstances.

Practical Impact of Order Reopening and Setting Aside

By way of the Rytr set-aside order, the FTC has now essentially provided guidance to marketers to argue against the broad implementation of means and instrumentalities liability.

The order setting-aside the 2024 final consent order against Ryter is based, in part, on matters of current public policy and in furtherance of technological innovation and legitimate business.  Those involved in FTC related investigations and enforcement actions might considering engaging a seasoned FTC CID attorney in order to put forth arguments that the product/service/conduct being investigated is not inherently deceptive and actually possesses myriad legitimate uses that are not inconsistent with public policy.

Informational purposes only. Not legal advice. This article is not intended to and should not be construed as legal advice. May be considered attorney advertising.