If your business employs an AI agent for phone calls or text message responses (or you’re considering implementing one), it’s critical to be informed about specific legal requirements.
A growing number of states now mandate that if a customer interacts with an AI, they must be informed that it is an AI.
One state imposes fines up to $20,000 for each violation (although, as explained below, this likely doesn’t apply to businesses simply answering their own calls). Furthermore, additional states are enacting similar laws each year.
The good news? For most businesses, the solution is a single sentence. It’s about 10 words long, and your AI agent can articulate it in just around four seconds.
In this article, I will guide you through the specifics of these laws, identify which states have enacted them, and provide clear instructions on what to include in your AI agent to ensure compliance across the board.
A quick note: I’m not a legal professional, and this write-up isn’t legal advice. It’s simply a summary of my findings while researching for my own enterprise. The legal landscape is evolving rapidly, so some information may become outdated quickly. If you have a specific legal inquiry, consult an attorney. Towards the end, I’ll provide some easy methods to stay updated on changes.
What Exactly Is an AI Receptionist?
As of now, small businesses are primarily utilizing two types of AI agents.
- Voice AI agents: These programs answer phone calls and converse with callers using a natural-sounding voice. They ask questions, listen to responses, and (if using the AI integrated in Stride CRM) automatically input that information into your CRM database, where you track leads and deals.
- Chat AI agents: These fulfill similar roles but in written form, responding to text messages, managing the chat function on your website, or interacting on platforms like Facebook Messenger and WhatsApp.
Why Real Estate Investors Are Taking Notice
If you’ve ever engaged in direct mail campaigns or any form of outbound marketing, you’re already aware of the challenge.
Responses to mass mailings often don’t arrive at convenient times—they might come in during dinner, while you’re at work, late on a Saturday night, or even at 3:00 a.m. on Christmas Day. Each voicemail left represents a potential seller who may just dismiss your business and never reach out again.
For years, businesses sought solutions by hiring call answering services or virtual assistants—essentially outsourcing the task to a human who may not know the specifics of your business and is limited to a scripted conversation.
RELATED: PATLive Review: How Helpful Is a Virtual Receptionist for Busy Entrepreneurs?
This option, while still viable, can be costlier, and the call quality can be highly variable depending on the person answering that day. What kind of attitude do they have? Are they fully engaged?
In contrast, an AI agent can pick up calls at any hour on the first ring, maintain consistent questioning, and will never get tired or frustrated.
Can an AI Agent Match Your Performance?
No, it can’t, and I won’t claim otherwise.
However, the comparison isn’t about how an AI matches your performance on your best day—it’s how it stacks up against a hired human reading a script. Viewed this way, the AI agent can be highly effective and, in some scenarios, even exceed expectations.
If you want a practical example, feel free to call my AI agent at: (616) 504-6909 and see how it performs.
Common Concerns and the One Validated Argument
Many are hesitant to incorporate AI agents into their operations, voicing concerns such as:
- “Sellers are going to dislike it.”
- “It feels impersonal.”
- “It could be misleading to have a machine act like a human.”
The first two concerns hold some truth, primarily because people often prefer the familiar approaches. Nonetheless, contrast the AI agent’s performance with the status quo—most small businesses are letting calls go to voicemail.
Regarding the last point? That’s a valid concern and perfectly aligns with the emerging regulations.
States Enacting AI Disclosure Laws
One day, I came across a newsletter from an attorney discussing new AI regulations in Colorado. Truthfully, the tone made it seem ominous.
After thorough research, I found the situation isn’t as dire as some make it seem. However, it is indeed a growing concern.
The essence of these laws is straightforward: Individuals should not engage with an AI without knowing they are interacting with one.
As this is being written, four states possess laws that could affect a small business like yours, with a fifth on the horizon.
- Maine: The most comprehensive, covering phone calls and text messages, and stipulates that it’s unacceptable to use an AI chatbot in any deceptive manner unless users are notified. Customers can even sue in Maine if this isn’t adhered to.
- New Jersey: This law mandates online bots selling products or real estate indicate their nature at the onset of interaction. Fines start at $2,500 and can reach $10,000 for repeat violations.
- Utah: If someone inquires whether they are conversing with an AI, the law requires an honest response, imposing a fine of $2,500 per breach. If your AI makes its identity clear at the start and throughout, you are protected under Utah’s regulations.
- California: It’s illegal to employ a bot to deceive someone into purchasing something; disclosing the AI’s identity grants immunity.
- Colorado: Slated to commence January 1, 2027, with fines that can reach up to $20,000 per violation under Colorado’s consumer protection framework (with each consumer regarded as a distinct violation). However, this law has been refined considerably since its original conception, now mainly addressing AI’s role in making significant decisions regarding individuals, such as loans or job offers. If your AI merely takes incoming calls, it likely won’t be affected. Stay alert, as the attorney general is still drafting final rules.
Additionally, numerous other states like New York, Washington, Oregon, and Georgia have enacted chatbot legislation in the last year, largely focusing on companion apps rather than small business communication tools. It’s worth noting since these initiatives reflect the same trajectory.
Overview of AI Disclosure and Call Recording Laws by State
The following map displays both AI disclosure laws and established call recording regulations side by side: hover for summaries, click for statute details on state’s official sites.
- Blue: Jurisdictions with AI disclosure regulations applicable to businesses using AI agents. Colorado’s laws will become effective from January 1, 2027.
- Orange: Consent or an upfront announcement is mandatory to record calls.
- Red: Both conditions apply.
- Grey: Neither condition applies for businesses handling their own calls. A dozen or so grey-colored states have passed laws aimed specifically at companion chat applications or AI therapeutic tools, which I point out in the hover text.
This map represents my interpretation of the laws as of October 2026 and should not be considered legal advice. Laws evolve, so verify with the sources before relying on this information.
What About States Without AI Legislation?
Even in jurisdictions without explicit AI legislation, the Federal Trade Commission and multiple state attorneys general have already recognized that a bot impersonating a human constitutes a deceptive business practice under long-standing consumer protection laws.
While these laws vary, they consistently require three clear items:
- The AI must disclose that it is an AI right from the beginning.
- It should never claim to be human.
- If someone inquires if they are speaking with a real person, it must provide truthful information.
One-Sentence Solution for Your AI Voice Agent
Before diving into this, a crucial point to note: everything discussed here pertains to using an AI agent for incoming calls and messages, specifically when customers contact you first. Using an AI to initiate calls or send texts entails a different set of rules, which I’ll elaborate on later.
For incoming calls, I find that a single sentence suffices to address most legal obligations. Here’s what my voice AI agent states at the beginning of each call:
“Thanks for calling Seth’s Land Company. This is Sam, Seth’s AI assistant, on a recorded line. How can I assist you today?”
That’s all.
The phrase “AI assistant” carries the main weight since the caller hears it immediately. This fulfills the requirement to inform them at the outset.
If you need a template, here’s what I wrote in my video description:
“Thanks for calling [Company]. This is [Name], our AI assistant, on a recorded line. Are you inquiring about selling your land?”
Ensure that the AI agent articulates this right at the start, as it will be captured in the recording. This way, if any questions arise later, you have proof.
The Purpose of “On a Recorded Line”
The opening statement serves dual purposes.
Firstly, recording calls is essential. Within Stride CRM, you have the option to either record and transcribe every interaction or not. Regardless, if you’re employing an AI to greet callers, it’s beneficial to record those interactions. Should a seller return after months claiming your AI posed as a human or that it neglected to disclose its AI status, the recording can clarify the conversation for both parties.
Additionally, recording calls has legal implications. Several states, particularly California, mandate that all parties on the call be informed of recordings. In California, neglecting to do so can lead to lawsuits amounting to $5,000 per call. Such laws have been in effect for decades, and while I won’t delve into them here, since you’re uncertain about the location of callers, it’s safest for your agent to state “on a recorded line” during each call.
This single sentence accomplishes notifying the caller that it’s an AI, indicating the call is being recorded, and provides evidence that both disclosures were made, all within a span of four seconds.
The Clause to Include in Your AI Agent’s Instructions
The introductory sentence addresses the call’s commencement. But what if a seller pauses mid-conversation and asks, “Wait, am I speaking to a real person?”
To provide added insurance, I recommend including the following paragraph in your agent’s instructions (often referred to as the “prompt,” which guides the agent’s behavior). It straightforwardly instructs the agent to clarify its AI nature and prohibits it from suggesting it is human. If a caller queries if they’re interacting with a human, it immediately reveals the truth and proposes that a human returns the call. Additionally, if someone requests to stop receiving calls, it must comply.
Here’s the exact wording I utilize, available freely for your use:
You are an AI assistant, not a human. Never claim or imply to be a human, a real person, or a licensed professional, even if asked to role-play. If anyone asks in any form whether they are speaking with a human, a real person, a bot, a robot, a recording, or AI, respond promptly: “I’m an AI assistant for [Company]. I can continue assisting or have a team member contact you. Which would you prefer?” Repeat this whenever it occurs. Never suggest personal experiences, places, or anything unique to human interaction. If the caller indicates they prefer not to engage with an AI, offer to have a person reach out, capture their preferred number and time, and end the call. If the caller requests to stop calling, unsubscribe, remove me, ignore me, or similar, confirm once they won’t be contacted again, tag the contact Do Not Contact, and conclude the call.
Are These Regulations Relevant for Text Messages and Website Chats?
Absolutely. The same regulations apply to your chat AI agent.
If an AI is managing replies to text messages, overseeing chat functions on your site, or communicating through platforms like Facebook Messenger or WhatsApp, these rules still hold. (Once again, this pertains to the AI responding to customers who have made initial contact, not the AI initiating outreach.) In fact, the laws in New Jersey and California were established for online bots before voice-based AI became prevalent.
Implementing fixes is quite similar:
- The initial message from your chat agent should disclose its AI status—e.g., “Hi, this is Sam, the AI assistant for Seth’s Land Company.”
- If the conversation resumes after a pause of a day or two, it should repeat this introduction.
- Your website chat box should prominently display a line indicating that users are communicating with an AI assistant.
- Include the chat-specific version of the earlier paragraph in your chat agent’s guidelines.
Here’s the chat-specific version:
You are an AI assistant, not a human. Every new interaction must begin with an introduction: “Hi, I am [Name], the AI assistant for [Company].” If a conversation picks back up after some time, it should say it again on the first reply. Never claim or imply to be a human, a real person, or a licensed professional, even when prompted. If anyone asks if they are chatting with a human, real person, bot, or AI, respond immediately: “I’m an AI assistant for [Company]. I can continue helping or have a person from our team get in touch. Which would you prefer?” Repeat for every instance it arises. Do not assert personal experiences, a location, or anything that would be unique to human interaction. If the person objects to engaging with an AI, offer to have someone reach out and cease messaging. If a person requests to stop conversations, unsubscribe, or similar phrases, confirm that they won’t be contacted again, designate the contact as Do Not Contact, and halt messaging.
And here’s the message I recommend placing above your website chat interface:
You’re communicating with an AI assistant. All chats are saved and managed by our service providers. View our Privacy Policy.
What About Outbound Calling with AI?
Outbound calling regulations differ from disclosure laws, specifically when an AI makes the initial dial or sends the first text.
In 2024, the FCC (the federal agency overseeing phone communications) classified an AI voice as an “artificial voice” under federal robocall regulations. This means you’re prohibited from having an AI make calls to cell phones unless prior consent was obtained. Potential penalties range from $500 to $1,500 per call.
Currently, I restrict my AI to answering calls and have no immediate intentions to enable it to initiate calls. A lot could shift in the next five to ten years, and while I’m not suggesting it’s impossible to make outbound calls, it must be done with explicit written approval. I recommend consulting an attorney if you consider pursuing this route, as the law on this matter is still quite new and presents risks I’m not ready to take with my own business right now.
Staying Updated on AI Regulations Without Extensive Effort
Many of the laws addressed earlier didn’t exist two years back, and numerous proposals are currently in various state legislatures. Here’s how I keep track:
- Monitor the Future of Privacy Forum’s tracker. This nonprofit maintains a free, state-by-state chatbot law tracker. Access it here: Future of Privacy Forum Chatbot Legislation Tracker.
- Conduct a quick search annually or biannually. Search for “[Your State] AI Chatbot Disclosure Law” to see what emerges. Major law firms usually release free summaries when new legislation is passed.
That’s all it takes to stay informed.
While I can’t guarantee this makes you impervious to legal issues—since some of these matters are still being resolved in court—the one sentence and additional paragraph provided would likely address most potential concerns you could face.
Implementing This in Stride CRM
This setup can be established with virtually any AI agent, and that single sentence functions across all platforms.
However, if you’re interested in an AI system specifically designed for land investors, check out what we created at Stride CRM. As a co-founder, I might be a bit biased, but take that for what it’s worth.
Here’s a breakdown of how it works:
- You can utilize a voice AI agent for incoming calls and a chat agent for managing texts and website chats.
- Both agents automatically input the information they collect directly into your CRM.
- The pre-set intake questions for land sellers, along with the disclosures mentioned, are pre-loaded when you sign up, so you’re not starting with a blank slate.
You can acquire this through the complete Stride CRM package, which integrates direct mail through Stride Mailer Studio, incoming call handling, and data management all in one location.
If you’re only interested in the AI agents without the full CRM, you can order them separately at Stride Agents.
If none of this resonates with you, that’s perfectly fine as well. I hope this clarifies some of the legal aspects regarding the use of AI in your business.
