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NYC Council weighs a ban on chat-based ad targeting
The News
On October 5, 2026, the New York City Council's Committee of the Whole held an oversight hearing on AI risks, at which representatives of OpenAI, Anthropic, Google and Meta testified under oath, and heard a package of AI bills. One, Council Member Frank Morano's chatbot bill (T2026-2599), would bar any chatbot provider from processing a user's chat log to decide whether to show an ad, which product or service to advertise, or how to customise an ad, beyond what is necessary to fulfil a user's express request. It would also require providers to tell users they are interacting with a chatbot rather than a human before its first output, every hour after that, and each time a user asks whether it is a real person, with civil penalties of up to $25,000 per violation and a private right of action. The committee laid the bill over without a vote.
Chandni Melwani
Founder & Editor
Oct 7, 2026 · 2 MIN READ
Know More
- — Status: heard as a preconsidered item and laid over by the Committee of the Whole on October 5, 2026. If enacted, it takes effect 180 days later.
- — Origin: the Council describes T2026-2599 as a local version of the People-First Chatbot Bill proposed by the Electronic Privacy Information Center (EPIC).
- — Other limits in the bill: no training on an adult's chat logs without affirmative consent, and none on a user the provider knows or has reason to know is under 18; no sale of chat logs without consent; no profiling from chat logs beyond what a user's express request requires; chatbots treated as products in product-liability suits.
- — A second advertising bill, T2026-2603, would require any ad promoting an AI model in the city to disclose whether the model was validated by a third party, and would bar materially false or misleading statements about an AI model's safety in such ads, at up to $25,000 per violation.
- — Absent: SpaceXAI, which the Council had subpoenaed. Speaker Julie Menin told the hearing the Council is pursuing the subpoena in court.
Council Member Frank Morano had one minute and a series of yes-or-no questions for the OpenAI, Google, Meta and Anthropic witnesses testifying under oath at the New York City Council’s October 5 hearing on AI risk. The last concerned his own bill: should a company be allowed to use someone’s private chatbot conversation “for targeted advertising or behavioral profiling without their affirmative consent”?
Anthropic’s Logan Graham said the company runs no ads. Meta’s Shane Cahill said conversations with Muse, Meta’s personal agent, do not inform ads on Meta’s other products. Google’s Alice Friend said users control whether their activity is used for training. OpenAI’s Morgan Dwyer, who answered first, took the safety questions and did not address the advertising one.
OpenAI sells ads inside ChatGPT, and says that during its test it chooses which ad to show by matching advertisers’ ads with “the topic of your conversation, your past chats, and past interactions with ads.” Morano’s bill would stop a chatbot provider processing a chat log to decide whether to show an ad, what to advertise or how to tailor it, beyond what is needed to fulfil a user’s express request. Advertisers get no access to the chats, OpenAI says; the bill covers the platform’s own use of them.
The bill reaches past the labs, too. It covers anyone “creating, distributing, or otherwise making available” a chatbot, wording broad enough to take in the AI agents brands run in customers’ DMs, and requires a notice that the user is talking to a chatbot before its first output and every hour after. David Carter of the Ecommerce Innovation Alliance, which he said represents about 20,000 e-commerce companies, testified that hourly notices suit a website chat but not text conversations lasting days or weeks.
The committee laid the bill over without a vote. Brands that buy chat ads should watch its targeting clause; brands that run their own AI agents, its definition of a chatbot.
Related
Frequently Asked Questions
Would the bill cover a store's own AI assistant or text-message agent?
As written, it covers any person creating, distributing or otherwise making available a chatbot, and the text sets no exemption by business size or channel. The Ecommerce Innovation Alliance told the Council it would reach companies that use AI to text customers who opted in to marketing messages. The ad-targeting limit uses a narrower definition of an advertisement, one displayed in exchange for money or other valuable consideration, including access to data, between the chatbot provider and a brand.
What did the city administration say about it?
It told the Council it supports the bill's goal and considers its approach sound, but that enforcing its data-security and privacy requirements would need technical and investigative capacity outside the scope of the agency that would enforce them. Separately, Speaker Julie Menin said the Council will send each company a list of questions it did not get answered at the hearing.
Who spoke for the bill?
An attorney for EPIC, which told the Council it developed the model bill with the Consumer Federation of America and Fairplay. EPIC said the bill would treat chatbots as products and hold the companies that make them accountable when they cause harm, and urged the Council to make sure enforcement is properly resourced.
Sources
- New York City Council, T2026-2599 (chatbot data privacy, security and transparency): bill text, fiscal impact statement and action history, read in full
- Committee of the Whole minutes, October 5, 2026: attendance, and the hearing and lay-over of each bill
- Council video of the October 5 hearing; the companies' answers and the administration, EPIC and Ecommerce Innovation Alliance testimony were read from its caption track, which is a live transcription
- Committee briefing paper for the October 5 hearing, including the legislative analysis of T2026-2599 and T2026-2603
- OpenAI, "Testing ads in ChatGPT": how ads are matched and what advertisers receive (read in a browser on October 6, 2026, and in the Internet Archive copy of September 26, 2026; openai.com blocks scripted fetches)
- New York City Council press release, September 28, 2026: the four companies agree to testify under oath, and the subpoena to SpaceXAI
- Hero photo: New York City Hall, Manhattan, by Ken Lund, Wikimedia Commons, licensed CC BY-SA 2.0
- Creative Commons Attribution-ShareAlike 2.0 Generic licence, which applies to the hero photo
Chandni Melwani
Chandni Melwani is the founder and editor of New in AI, covering AI agents, M&A, and enterprise adoption. She holds a Master's in Management of Artificial Intelligence from Queen's University and brings a practitioner's perspective from her work in Data and AI leadership.
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