AI Accountability Act Creates $1,000 Minimum Federal Lawsuit for Data Misuse, Voids Mandatory Arbitration

The new AI Accountability and Personal Data Protection Act is throwing down a major federal marker: If a company uses, collects, or sells your personal data without getting your explicit, upfront permission, you can now sue them in federal or state court. This isn't just a slap on the wrist; if you win, the law guarantees you the greater of three times the profit the company made off your data, your actual losses, or a minimum of $1,000. The entire point of this bill is to give individuals real power and real consequences when their data is misused, especially as AI systems become central to how data is processed.

What Counts as Your Data Now?

This Act defines “covered data” extremely broadly, which is a big win for individuals. It includes the usual suspects like your name and social security number (Personally Identifiable Information, or PII), but it goes much further. It covers your IP address, your location data, your browsing history, and any behavioral patterns companies use to build a profile on you. Crucially, it also covers data that is inferred or generated about you, meaning the guesses AI makes about your political leanings or financial status are also protected. The definition even extends to content you create—like your original artwork or writing—that might be used to train a generative AI system, even if you haven't formally registered the copyright (SEC. 2).

The New Rule: Express, Prior Consent

Forget those endless privacy policies where you click “I agree” just to get to the content. This bill requires “Express, prior consent” before a company can touch your covered data. This is a high bar. A company can’t trick you into giving consent, nor can they make giving up your data mandatory just to use a basic service, unless that data is absolutely essential to make the service work. For example, a map app needs your location to work, but a news site doesn’t need your full browsing history to show you an article. If they want to share your data with a third party—say, selling your purchase history to an ad agency—they must clearly name every single third party at the exact moment they ask for your permission. Burying this list in a linked document or terms of service is explicitly ruled out as invalid consent (SEC. 3).

Striking Down the Arbitration Wall

Perhaps the most significant change for the average person is the section targeting mandatory arbitration. Many companies require customers to sign away their right to sue in court or join a class action lawsuit as part of the terms of service. This bill makes any pre-dispute agreement that forces you into private arbitration or stops you from joining a class action lawsuit over a violation of this Act completely void and unenforceable (SEC. 3). If you’ve ever felt powerless against a massive corporation because you were forced into arbitration, this provision is designed to restore your right to pursue justice collectively. This is a game-changer for data privacy litigation.

Setting the Floor, Not the Ceiling

This new federal law acts as a minimum standard. It doesn't override or cancel out any state laws that are already in place and offer stronger protections or better remedies. If your state, like California, already has a stricter data privacy law, that law stays put. The federal law simply ensures that everyone in the country receives at least the protections outlined here. This means companies can't argue that this new federal law preempts, or cancels out, stronger state-level protections (SEC. 4).