FCCPC Proposes Stringent Penalty For Negative Use Of AI, Recommends N100m Penalty For Defaulters

The Federal Competition and Consumer Protection Commission (FCCPC) has proposed new regulations that could make businesses liable for promotional messages and claims produced through Artificial Intelligence (AI), with corporate offenders facing penalties of up to N100 million or one percent of their previous year’s turnover, whichever is higher.

The Proposal comes in the midst of wider discussions about overlapping responsibilities for consumer protection, competition data governance and AI regulation. Earlier this year, the Federal Ministry of Communications, Innovation and Digital Economy directed regulators to maintain the regulatory status quo on internet platforms and other digital issues pending a harmonized national framework.

The proposed measures are contained in the draft Sales Promotion Regulations 2026, released recently. The framework covers the use of artificial intelligence, machine learning and other automated technologies in promotions and consumer engagement targeted at Nigerians.

However, the provisions are still proposals and have not become final enforcement rules. If adopted, businesses that use automated technologies for marketing would be required to register their use with the FCCPC.

The proposed regulations would also require promotional content produced through automated systems or AI to be clearly identified. This would allow consumers to know when they are engaging with technology rather than directly with a person.

The rules would cover tools including chatbots, virtual influencers and automated messaging systems, which businesses increasingly use to promote products, respond to customer enquiries and influence purchasing decisions.

Under the proposal, companies using such technologies would have greater responsibility for ensuring that their commercial messages are accurate and transparent.

One of the key provisions of the proposed regulations is that businesses would remain responsible for representations generated by the technologies they deploy.

This means a company could not avoid liability by claiming that a misleading statement, discriminatory recommendation or harmful promotional message was produced by an automated system.

The provision could require businesses to strengthen human oversight of promotional materials, product descriptions and customer communications generated through automated systems.

The proposal comes amid growing concerns over who should be held accountable when automated technologies provide consumers with inaccurate information or influence purchasing decisions through false or misleading claims.

The draft regulations also seek to give consumers greater control over automated marketing communications.

Businesses using automated systems to communicate with consumers would be expected to provide an option for customers to opt out.

The systems would also be required to meet provisions designed to prevent manipulation, misinformation and the exploitation of consumer data or behavioural patterns.

If adopted, the rules could influence how companies create promotional campaigns, personalise recommendations and interact with customers through automated channels.

The proposed measures come as businesses across Nigeria increasingly use automated technologies in marketing, customer service and online commerce.

Beyond the proposed corporate penalty of up to N100 million or one percent of the previous year’s turnover, individuals could face fines of up to N50 million.

The draft also proposes additional penalties of up to N10 million for specific violations, including failing to provide promotional prizes that were promised to consumers and making false statements in applications.

The turnover based penalty could mean that some corporate offenders face fines exceeding N100 million, depending on their annual revenue and the nature of the violation.

The FCCPC’s proposal therefore seeks to place greater responsibility on businesses using automated technologies in their dealings with consumers, while giving the commission greater oversight of how such tools are used in promotional activities.