New Consumer Safety Bill Mandates AI Pilot Program for CPSC and FTC Crackdown on Digital Token Scams

The new Consumer Safety Technology Act is basically an instruction manual for federal agencies telling them: “Stop using 1990s technology to solve 2024 problems.” This law forces the Consumer Product Safety Commission (CPSC) to launch a one-year pilot program using Artificial Intelligence (AI) to enhance product safety, while also requiring the Department of Commerce and the Federal Trade Commission (FTC) to study and report on how blockchain and digital tokens affect consumer protection. The goal is to integrate cutting-edge tech into the regulatory toolbox, focusing on making things safer and cracking down on digital fraud, with all major findings required to be posted publicly for everyone to see.

The CPSC Gets an AI Upgrade

If you’ve ever worried about recalled products still showing up on store shelves—or worse, dangerous knockoffs slipping past customs—this part of the bill is for you. Title I, the AI for Consumer Product Safety Act, requires the CPSC to start an AI pilot program within one year of enactment (SEC. 102). They must use AI for at least one of four critical tasks: tracking injury patterns, spotting product hazards, monitoring retailers for recalled items, or flagging unsafe imports at the border. Think of it like giving the CPSC a super-smart, tireless intern that can instantly cross-reference millions of injury reports and sales listings to find patterns a human investigator might miss. This means potentially faster detection of faulty products, which is a win for parents and anyone buying consumer goods. However, manufacturers should prepare for increased scrutiny, as AI tracking could lead to quicker identification and recall of their products.

Blockchain: A Study in Fraud Prevention

Title II, the Blockchain Innovation Act, is less about enforcement and more about homework. It requires the Secretary of Commerce, working with the FTC, to spend a year studying how blockchain technology—the tech behind cryptocurrencies—can be used to prevent or reduce fraud and deceptive business practices (SEC. 202). This isn't about regulating crypto itself; it's about seeing if the same secure, distributed ledger technology can be used as a tool for consumer protection, perhaps by creating more transparent supply chains or verifying product authenticity. The study must weigh the benefits against the risks and suggest any necessary regulatory changes. For a small business owner who relies on a complex supply chain, this could eventually lead to new, more secure ways to verify their products’ origins and quality, reducing the risk of counterfeits.

FTC Takes Aim at Digital Token Scams

Finally, Title III, the Digital Taxonomy Act, addresses the Wild West of digital assets. Congress explicitly notes that the FTC has already gone after bad actors running scams involving tokens (SEC. 302). This section mandates that the FTC must produce a detailed report within one year on unfair or deceptive acts related to token transactions (SEC. 303). They have to detail all their current enforcement actions and prevention efforts, and most importantly, they must suggest new laws Congress should pass to better protect consumers in this space. If you’ve ever seen a friend or colleague lose money in a fly-by-night digital investment, this report is the first step toward getting federal agencies the tools they need to bring some order to the market. Entities involved in selling digital tokens should be on notice: the FTC is coming to Congress with a shopping list of new enforcement powers.