Labor & Employment Law Daily Wrap Up, AI NEWS—Legislation would expose Americans to AI-powered scams, (Jun 16, 2025)

By R. Jason Howard, J.D.

A moratorium would undermine the work NASAA members and regulators have done to raise awareness about AI threats to investors.

In a letter to ranking members of Congress, NASAA has expressed concerns over a moratorium provision on enforcement of state-level AI laws or regulations included as part of the 2025 budget reconciliation process that has the potential expose Americans to AI-powered scams.

NASAA urges caution and explains that the Senate version of the legislation “would condition eligibility for a grant program intended to provide states with funds to award subgrants to facilitate the construction of broadband infrastructure on compliance with a 10-year moratorium on enforcing certain AI laws or regulations.”

The moratorium would provide that “no state or political subdivision thereof may enforce any law or regulation regulating AI models, AI systems, or automated decision systems entered into interstate commerce during the 10-year period following the enactment of the law,” but NASAA believes that the moratorium should be reconsidered for two reasons.

The first concerns AI-powered scams with NASAA stating that “disincentivizing states from enforcing AI regulations would place Americans at an increased risk of falling victim to online scams, including online investment scams.” This runs contrary to the work that NASAA members and other regulators have done to raise awareness about AI threats to investors and other capital market participants.

The second reason is that the moratorium would “make it more difficult for states to adapt to innovations in financial services while also depriving federal policymakers of valuable insights derived from state-level efforts to prevent the misuse of AI-powered technologies.”

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