Colorado Emerges As Pioneer With Consumer AI Legislation

The landscape of artificial intelligence (AI) regulation in the United States is evolving rapidly, with Colorado emerging as a pioneer in consumer protection measures with the Colorado Act Concerning Consumer Protections in Interactions with Artificial Intelligence Systems (the Colorado AI Act). This act, the first of its kind in the country, aims to reshape AI system deployment and development, setting a precedent for other jurisdictions. Scheduled to take effect on Feb. 1, 2026, the Colorado AI Act introduces a comprehensive framework aimed at addressing the potential risks associated with AI systems, particularly those making consequential decisions affecting consumers.

Scope and Applicability

The Colorado AI Act has a broad scope, encompassing both developers and deployers of AI systems within the state. Developers refer to entities conducting business in Colorado engaged in the development or substantial modification of AI systems. Deployers are defined as entities operating within Colorado that deploy high-risk AI systems. Additionally, the scope of the Colorado AI Act extends to interactions with AI systems that have a material legal or similarly significant effect on various aspects of consumers' lives, including education, employment, financial services, government services, health care, housing, insurance and legal services. Unlike some consumer privacy laws, the Colorado AI Act does not establish a minimum threshold of consumers for its applicability, meaning that entities of any size engaging in covered activities are included. The act applies to interactions involving AI systems that have a material legal or similarly significant effect on various aspects of consumers' lives, including education, employment, financial services, government services, health care, housing, insurance and legal services. The term "consumer" refers specifically to Colorado residents.