This legislation, known as the Algorithmic Accountability Act of 2025, mandates that the Federal Trade Commission (FTC) develop regulations for assessing the impact of automated decision systems and augmented critical decision processes. The bill defines an augmented critical decision process as one using an automated system to make a critical decision, which includes decisions with significant effects on a consumer's life related to education, employment, housing, healthcare, and financial services. It applies to covered entities, generally large organizations or those handling over one million consumer records, that deploy or develop such systems.

The FTC is directed to promulgate regulations within two years, requiring covered entities to perform impact assessments both before and after deploying these systems. Entities must maintain documentation of these assessments and submit annual summary reports, as well as initial reports for new systems, to the FTC. The regulations also require meaningful consultation with internal and external stakeholders, including civil rights advocates, and prompt mitigation of any likely material negative impacts identified.

Impact assessments must include evaluating previously existing decision processes, documenting stakeholder consultations, and performing ongoing testing for privacy risks and performance. This includes assessing differential performance across various demographic characteristics like race, gender, and disability, where information is available. Covered entities must also document data sourcing, ensure consumer rights such as notice and opt-out mechanisms, and identify and mitigate any likely negative impacts on consumers.

The FTC will publish an annual report summarizing trends from these submissions and establish a publicly accessible repository. This repository will contain a limited subset of information from the summary reports, such as the identity of the covered entity, the critical decision being made, and links to consumer recourse mechanisms. The goal is to inform consumers, aid researchers, and ensure compliance.

For enforcement, violations of the Act or its regulations will be treated as unfair or deceptive acts under the Federal Trade Commission Act, allowing the FTC to take action. State Attorneys General are also empowered to bring civil actions on behalf of their residents. The bill establishes a new Bureau of Technology within the FTC, staffed with technology experts, to provide technical assistance, advise the Commission, and aid in enforcement of these provisions. Importantly, the Act explicitly states that it does not preempt any State, tribal, city, or local law, regulation, or ordinance.