In 2025, the retail and fashion industries are bracing for a transformative year, heavily influenced by the policies of the new Trump Administration. These policies promise rapid and significant changes, particularly in areas such as trade, tariffs, and immigration, which will profoundly affect global supply chains and labor dynamics.
Companies will need to strategically navigate these shifts while also addressing emerging legal challenges like novel class action lawsuits and regulatory scrutiny in areas such as data privacy, influencer marketing, and sustainability. As factory raids and compliance issues intensify, fashion and retail companies must be prepared to adapt swiftly to this evolving legal landscape.
1. The Trade World Under Trump 2.0: You Are Sure to Get Whiplash
President Trump’s America First Trade Policy is certain to fundamentally alter the global operations and sourcing strategies of most fashion and retail companies. His policy, marked by protectionism, high tariffs, and a push towards domestic production, has created an uncertain and unpredictable trade landscape, with sweeping changes in policy made within hours.
In just a few short weeks, President Trump has threatened tariffs of 10%-100% on nearly all US trading partners, including Free Trade Agreement countries. On February 1, he announced 25% additional tariffs on products of Canada (10% for energy) and Mexico and 10% additional tariffs on products of China origin, effective February 4. The president invoked the International Emergency Economic Powers Act to enable him to act immediately and unilaterally upon declaring a national emergency related to migrants and fentanyl entering from those countries. On February 3, the United States and Mexico brokered a one-month temporary reprieve from the tariffs, pending a more permanent agreement.
However, of more significance to the fashion industry that continues to heavily source products from China, Trump also signed an executive order (EO) implementing 10% tariffs on products from China (and Hong Kong). The tariff increases were effective February 4, with very limited exemptions for goods in transit as well as donations, informational materials, and certain Chp. 98 goods. Remember that these additional tariff increases are on top of standard tariffs and Section 301 tariffs ranging between 7.5%-25%. The China EO also prohibited the use of the de minimis program, which allows for duty free entry of goods under $800 and without standard import formalities.
In a confusing turn of events, the Administration reversed course a few days later, and on February 7, published an EO (dated February 5) that rescinded that agreement pending the US Secretary of Commerce’s review of how tariffs would be collected for these products. On February 7, Trump also announced impending reciprocal tariffs on unspecified countries. You can be sure that additional US tariffs will be met by retaliatory tariffs. As the tariff wars ramp up, in the America First Trade Policy, Trump has tasked various government agencies to review all aspects of US trade policy, from Free Trade Agreements to antidumping and countervailing duties and more. Expect many changes to come that will likely restrict free trade.
Is your head spinning yet? Mine too. To keep track of these fast moving developments, we have developed a Tariff Tracker with up to date information regarding threatened and imposed tariffs. It is clear that companies must diversify their supply chains in anticipation of sudden trade restrictions or tariff increases. Companies should also evaluate tariff mitigation strategies that will lower their overall tariff liability, even if the tariff increase the EO’s restrict mitigation of the additional tariffs. Our team is counseling a multitude of clients in navigating this uncertain trade landscape.
2. Immigration
President Trump has increased immigration enforcement actions, and employers in the fashion industry may see an increase in raids, unannounced immigration workplace investigations, and governmental I-9 audits. Accordingly, employers should be prepared for such governmental actions. Government officials may appear without notice at a workplace and demand to speak to workers in private and obtain personnel and business documents.
- Does your receptionist know what to say and do?
- Do they need a warrant or subpoena?
- Should you hand over the documents requested? If so, do they get copies or originals, and how can you get a log of what they took?
- Should you let them speak to your workers? If so, can you be present during interviews?
- Can you tell them no?
- Can they walk around the workplace any way they want?
- Can you park them in a less visible conference room?
- Who should the employer contact for assistance and in what order?
These are just some of the questions employers should have the answers to in order to prepare for workplace enforcement actions.
The federal Form I-9 is the form that every employer has to complete for every paid employee within their first three days of employment. To complete the form, the employee must present documents from the US Department of Homeland Security’s List of Acceptable Documents to prove both identity and work authorization. Generally, if that work authorization expires, employers must reverify work authorization on the form by inspecting additional acceptable documents before the initial work authorization expiration date. There are rules and standards instructing employers how to retain I-9’s and for how long. President Trump has increased immigration investigation efforts, including I-9 audits. Accordingly, employers should get their I-9 records in order now. To accomplish that, employers should conduct a proactive and internal I-9 audit to fix as many deficiencies as they can. Employers who proactively correct their I-9’s can take advantage of the “good faith compliance” defense and receive credit for those corrections during a governmental audit, mitigating potential penalties.
We have detailed Guidance Memoranda on both of these topics: (1) how to prepare for an unannounced immigration workplace investigation and (2) how to conduct a proactive, internal I-9 audit. We can also provide personalized trainings for your organization on both of these areas of concern. Please feel free to reach out with any questions regarding these or any immigration topics.
3. Influencer Matters
Looking Out for NAD
With the Federal Trade Commission (FTC) less likely to take enforcement actions, fashion and retail companies may have to act directly. The BBB National Programs’ National Advertising Division (NAD), an advertising industry self-regulatory body, recently took issue with social media content posted by influencers engaged by a retailer and recommended that the retailer provide more robust and prominent guidance to its influencers on compliance with the FTC’s Endorsement Guidelines. The NAD’s decision, which originated from its monitoring program that opens cases against parties it considers to be engaged in false or misleading advertising, underscores the importance of companies educating and monitoring their networks of influencers. It is also a good reminder for retailers to provide detailed guidance to their influencers on compliance with the FTC’s Endorsement Guidelines, and to maintain a monitoring program that keeps track of what their influencers are posting and whether those posts are legally compliant. And with uncertainty around the new Administration’s priorities in the consumer protection space, this case is also a reminder that the NAD will not hesitate to tackle influencer marketing issues identified through its monitoring program. Because the NAD does not possess any legal authority, participation in its proceedings is voluntary. However, if an advertiser refuses to participate in a NAD proceeding or to comply with NAD recommendations, the organization will refer the matter to the FTC and issue a press release discussing the matter, which, in practice, places pressure on advertisers to cooperate.
TikTok Ban
On January 19, a federal ban on TikTok was implemented, resulting in the app going dark for several hours as the social media app voluntarily shut down its US servers. Shortly after President Trump was inaugurated, he issued an executive order that extended the ban on the app by 75 days to allow various stakeholders, including the relevant federal agencies, to address the national security concerns posed by TikTok. If the ban on TikTok is implemented after the extension period expires, a major shift in marketing and advertising practices will be necessary to respond to the removal of the app. With many influencers having already announced that they will be moving their presence to other platforms like Instagram, YouTube, and Lemon8, current marketing campaigns aimed specifically at TikTok will inevitably be impacted and existing contracts may require amendment to address the ban.
4. E-Commerce
Privacy
Retailers will want to be aware of comprehensive data privacy laws taking effect in 2025 as more states aim to protect consumers’ personal data. In January, five new laws became effective in Delaware, Iowa, Nebraska, New Hampshire, and New Jersey. Similar to the other 13 state-level comprehensive privacy laws enacted so far, these laws seek to prevent the misuse of consumer’s personal information, mandate specific privacy notices, limit certain data collection, and grant individuals more control over their personal information; however, there are some notable differences which we have outlined here. Three additional laws become effective this year in Tennessee (July 1), Minnesota (July 31), and Maryland (October 1, applicable to data processing beginning April 1, 2026). Companies should consult the data privacy laws for each state in which they operate and review and update their data privacy policies and processes to ensure compliance with the new laws.
In a 2023 alert, we previously outlined the surge of class action litigation under the Illinois Biometric Information Privacy Act against retailers using virtual “try-on” features. These cases continue to proliferate. More recently, luxury retailers are offering wearable and immersive technologies to create unique brand experiences and attract younger customers, which may create additional privacy compliance obligations where those technologies may be collecting “neural data.” Essentially a subset of biometric data, neural data includes “information that is generated by the measurement of the activity of an individual’s central or peripheral nervous systems.” This data would include customer reaction data or sentiment analysis gathered via immersive shopping sessions, as well as vital signs (such as a heart rate) collected via “smart clothing.” Last year, California and Colorado passed legislation to carve out “neural data” as a specific type of sensitive personal data under their respective state privacy laws (see here), granting that data heightened protections, so brands should familiarize themselves with these laws to determine whether updates to its Privacy Policy and/or consent from the consumer are required. Other privacy laws, such as Washington state’s My Health My Data Act (which has a private right of action in addition to regulatory enforcement), also apply to companies in the fashion industry that collect and use consumer’s health data (see here for more information).
Fashion brands also remain a target for ransomware attacks, as many have vast amounts of consumer personal information, with the primary point of entry being phishing attacks against employees. Threat actors are also increasing phishing attacks against consumers around the holidays by spoofing fashion brands’ websites and email addresses to mimic sales and offers. Companies should consider taking steps to secure their systems and brands against these attacks. To improve a company’s ability to respond to and recover from a security incident, we recommend that companies review their information practices so they understand what data is being collected, how it is used and disclosed, and where it is being stored. Employees should also be provided annual privacy and data security training as part of required safeguards to help defend against internal and external risks to personal data.
Chatbots/CIPA
In a recent surge of California Invasion of Privacy Act (CIPA) lawsuits and demand letters, professional plaintiffs are accusing website operators of “secretly installing tracking software on the devices of all visitors” in alleged violation of California law. Similar to CIPA chat lawsuits, the plaintiffs claim that the use of online tracking technologies, such as pixels, cookies, and web beacons, are tantamount to the use of a “pen register” (PR) or “trap and trace” device (TTD) that illegally capture the communications “signaling information” under Section 638.51 of CIPA. And this is true even where a website operator has an immediate pop-up window disclosing its cookie practices.
However, the sole purpose of these sections of CIPA was to authorize state and local law enforcement to use PR and TTDs under state law on telephone lines with a court order. In other words, this statute was not enacted to restrict any party to a communication, including website operators, from continuing to use information exchanged in the ordinary course of a communication. Otherwise, anyone using caller ID on their phone without a court order would be in violation of this law. In fact, this is the only reasonable interpretation of this law when considering the statutory definitions, which expressly limit the key terms of “wire communication” and “electronic communication” as applying to the interceptions of wire and electronic communications. That is, these definitions expressly do not apply to stored communications or stored content. And as we’ve successfully argued in similar CIPA cases, once a consumer reaches the destination website, that is reception, not interception.
Terms of Use
Website and mobile app terms of use are a crucial way for companies to manage their legal risk. They can and should include provisions that, among other things, protect the company’s intellectual property, establish rules of conduct, disclaim warranties, limit liability, and mandate how disputes will be adjudicated. But without careful drafting and routine reviews, businesses can face substantial legal exposure.
Increasingly, online businesses face the threat of mass arbitration. Requiring users to resolve disputes through binding, individual arbitration has long been regarded as an advantageous way to avoid class actions and limit litigation costs. Recently, however, plaintiffs’ lawyers, in response to such provisions, have begun filing hundreds or thousands of individual arbitrations, resulting in overwhelming upfront arbitration fees for the business. Businesses have tried a number of tactics to counteract this threat — for example, by requiring batched or bellwether arbitration and/or including fee shifting provisions — but, in several cases, courts have declined to enforce such provisions, finding that they unfairly favor the business in the dispute resolution process. This is an evolving area of the law with some inherent uncertainty. Still, companies should review and tailor their terms of use to address the risk of mass arbitration while steering clear of higher-risk provisions.
Beyond the substance of the agreement, a critical threshold question is whether a business’s terms of use represent a valid agreement in the first place. Online contracting is held to the same requirement of mutual assent as traditional contracting. It is now well-established that simply placing a hyperlink to the terms of use in the website footer is unlikely to result in an enforceable contract. Instead, users must take some action to affirmatively manifest their assent to the terms of use. While simple in theory, courts closely scrutinize user interfaces — considering factors like font size and the placement and color of hyperlinks — to determine whether there is sufficient evidence of user acceptance. Similar challenges are faced when businesses seek to amend their terms of use. It is essential for companies to carefully design their user interfaces and notifications to ensure that they result in an enforceable agreement. After all, even the most ironclad terms of use are useless without an enforceable contract.
The Mail Order Rule Still Matters
The Mail Order Rule, issued in 1975, requires sellers who solicit buyers to order merchandise through the mail, via the internet, or by phone to have a reasonable basis to expect that they can ship within the advertised time frame, or, if no time frame is specified, within 30 days. The Rule also requires that, when a seller cannot ship within the promised time, the seller must obtain the buyer’s consent to a delay in shipping or refund payment for the unshipped merchandise. In a December 2, 2024, press release, the FTC announced the filing of a court order requiring an online marketplace operator to pay more than $2 million for violating the Mail Order Rule and the company’s own policies related to shipping and refunds. As discussed in our alert regarding this case, retailers making promises to consumers, especially related to refunds and shipping, should review their policies and procedures to ensure they can operationalize the policies as advertised.
5. Environmental, Social, and Governance and Public Health
Extended Producer Responsibility
In 2025, we can expect to see more states taking significant steps towards sustainability by enacting laws that support the circular economy and “extended producer responsibility” (EPR). These laws aim to reduce waste, encourage the reuse and recycling of products at the end of their life cycle, and shift responsibility for product disposal from landfills to the businesses that create clothing and apparel products. Trending areas include EPR for textiles and packaging:
- Apparel. California became the first state to mandate EPR for textiles, clothing, footwear, and accessories. The law requires producers of textile and apparel to form a producer responsibility organization (PRO) to manage textile reuse and recycling programs. We cover that law here and expect other states to follow suit.
- Packaging. California, Colorado, Minnesota, Maine, and Oregon are now requiring EPR for packaging materials, and other states, like Maryland, are already thinking about doing the same. Like the EPR law for apparel, these laws generally require producers and manufacturers of packaged items to form a PRO, and joining the PRO by specified dates is required in order to continue to sell packaged products in the states.
Despite these legislative efforts, some individuals believe that states are not enacting laws quickly enough to address these issues. As a result, certain groups are resorting to tort-based litigation to compel changes in corporate behavior across the industry. Class action lawsuits targeting corporate statements regarding environmental impacts, product biodegradability, and product recyclability are becoming increasingly common.
PFAS
We expect 2025 to be another year chock full of legislative and case law updates for fashion companies manufacturing and selling products containing intentionally added per-and polyfluorinated substances (PFAS). As of January, at least six states, including California and New York, implemented or expanded total bans on the sale of products containing intentionally added PFAS, including textiles and cosmetics, among others. In most cases, this ban encompasses products that were imported and distributed to retailers prior to January 1, with no exception for goods sold online. Some manufacturers continue to scramble to find solutions for unsold inventory and could find themselves in litigation over retailers’ unsellable stock.
Just as fashion manufacturers were quickly looking for solutions for existing inventory containing intentionally added PFAS, many of the same companies were also rushing to satisfy the US Environmental Protection Agency’s (EPA) PFAS reporting rule, promulgated in October 2023, regarding reporting and recordkeeping requirements for PFAS. The final EPA rule requires manufacturers or importers of all PFAS-containing “articles” (which includes both finished consumer products and their individual components) to provide a one-time report to EPA on the presence of PFAS in their products for each year from 2011 to 2022, even if the products have been discontinued. In September 2024, the EPA extended the reporting period by eight months, opening on July 11 with a deadline of January 11, 2026, providing some degree of relief to the many fashion companies struggling to locate, extract, and organize what might be a vast amount of historical data.
This year, we anticipate seeing a multitude of consumer class action lawsuits alleging that fashion manufacturers failed to adequately alert consumers as to the presence of PFAS in their products. During 2024, these claims have been grounded in states’ consumer fraud laws, unfair trade practices acts, and breach of warranty causes of action. The alleged damages are purely economic, i.e., the plaintiffs claim they would not have paid what they paid for the products had they known of the presence of PFAS in them. Certain defenses have emerged on the validity of total organic fluorine testing, known as a PFAS screening test. We expect the litigation landscape to further develop in the coming year.
MoCRA
Fashion houses with cosmetic lines should ensure they remain up to date with US Food and Drug Administration (FDA) requirements under the Modernization of Cosmetics Regulation Act of 2022 (MoCRA), some of which have already gone into effect, with others still yet to come. As we previously reported, as of January 1, the MoCRA requirements already in effect include facility registration, product listing, safety substantiation for products and ingredients, record keeping, adverse event reporting, and new labeling requirements (labels must now include a domestic address, domestic phone number, or electronic contact information via which companies can receive adverse event reports). The FDA also recently issued a proposed rule aimed at protecting users of talc-containing cosmetics from potential exposure to asbestos that addresses required testing, record keeping, and agency enforcement authority. While it will be quite some time before we see a final rule governing talc-containing cosmetics, fashion houses should nonetheless review the proposed rule, consider submitting comments to the FDA on the proposed rule, and ensure they are able to comply with the new requirements. Still to come are FDA proposed rules regarding good manufacturing practices and fragrance allergen labeling, both of which will undoubtedly include significant new requirements for cosmetics. ArentFox Schiff will continue to closely monitor for additional updates on MoCRA.
6. Supply Chain
Given the trend towards global forced labor and supply chain due diligence legislation, it is more important than ever that companies have diversified and traceable supply chains in order to mitigate supply chain risks. US law (including the Uyghur Forced Labor Prevention Act) prohibits the importation of goods produced using forced labor anywhere in the supply chain and continues to expand the list of products from certain suppliers that are banned from entering the United States. See our annual forced labor Guide for Global Businesses for more information. For several years, various US states including California, New York, Washington, and Massachusetts have enacted or proposed supply chain reporting laws, some that specifically target the fashion industry. Countries such as the United Kingdom, Canada, Germany, and Australia have also enacted labor focused supply chain reporting requirements that require public disclosure on supply chain diligence efforts. In addition, the European Union is implementing a digital product passport requirement with a focus on the fashion industry.
The common theme in this evolving regulatory landscape is that fashion and retail companies need to implement procedures to identify the suppliers in their supply chain and take accountability for their labor and/or environmental impact. Supply chain tracing to the raw material level can be challenging given the industry’s deep and opaque supply chains, however we regularly counsel companies on strategies to conduct supply chain due diligence and mitigate risks.
7. Labor and Employment
Fashion Workers Act
On December 21, 2024, New York Governor Kathy Hochul signed the Fashion Workers Act into law, introducing new regulatory obligations for fashion companies, advertising agencies, model management companies, and other entities working with fashion models. Effective June 19, the Act establishes labor protections for models and freelance talent in New York’s fashion sector, including heightened consent requirements for using generative artificial intelligence (AI) to create or reproduce models’ likenesses. As discussed in our alert, the Act applies to “model management companies,” “models,” and “clients,” with broad definitions that encompass various entities receiving modeling services. A key issue arises for fashion brands that hire models directly, as the Act is currently silent on whether such brands must comply with model management company regulations in addition to those imposed on clients.
The Act imposes several new obligations, such as requiring model management companies to register with the New York Department of Labor by June 19, 2026, and establishing fiduciary duties to models, including contract transparency and explicit conduct agreements. It also limits commission fees, sets minimum compensation rates, and mandates meal breaks for extended jobs. Regarding AI, the Act requires prior written consent for using a model’s digital replica and restricts agencies from licensing a model’s likeness without express authorization. Noncompliance can result in fines and legal liabilities, with models able to file complaints within six years of alleged violations. As New York plays a central role in the fashion industry, these regulations are expected to have significant influence, prompting industry players to ensure compliance with the new legal requirements.
California Class Action and PAGA Update
Class actions remain prevalent in California, particularly for fashion and retail brands. The class actions could address a variety of issues, ranging from wage and hour compliance to unfair business practices and beyond. However, arbitration agreements continue to provide employers relief because the agreements can waive class action disputes.
As discussed in our alert, the Private Attorneys General Act (PAGA) actions remain equally as prevalent for alleged violations of California’s Labor Code. In a PAGA lawsuit, the plaintiff steps into the shoes of the State of California and represents a group of allegedly aggrieved employees who seek penalties for alleged violations of the law. A PAGA lawsuit comprises the plaintiff’s individual PAGA claim and the representative claim on behalf of others. Arbitration agreements are equally as important in limiting liability under the PAGA. A recent case from the California Court of Appeal, Rodriguez v. Lawrence Equipment, Inc., determined that a plaintiff loses standing for the representative claim after a loss in individual arbitration. This presents a huge win for employes and underscores the importance of maintaining an updated arbitration agreement.
California Independent Contractor Protections
California’s new Freelance Worker Protection Act (FWPA), effective January 1, mandates that private employers hiring certain independent contractors provide a written agreement specifying terms and ensure timely compensation. The FWPA applies to contracts between a “hiring party” and a “freelance worker” for professional services valued at $250 or more. The law requires written contracts to include details such as the names and addresses of the parties, an itemized list of services, compensation rates, and payment timelines. It also mandates that freelance workers be paid by the specified contract date or within 30 days of service completion if no date is specified. The FWPA prohibits discrimination, retaliation, and changing contract terms as a condition for timely payment.
To comply with the FWPA, businesses should identify vendors classified as freelance workers, review and update existing contracts, and ensure anti-discrimination policies include protections for freelancers. Training hiring managers on the new requirements and ensuring timely payment to freelance workers are also essential steps. The FWPA allows freelance workers to sue for enforcement, with potential damages including additional compensation for contract violations or failure to provide a written contract. Thus, there is no better time to ensure compliance with these new requirements.
8. Consumer Concerns
ADA
According to the US Department of Justice (DOJ), more than 50 million Americans with disabilities are potential customers for retail businesses across the country. These 50-million-plus customers, along with their families and friends, patronize retail stores. The DOJ believes that accessibility makes good business sense because “an accessible retail establishment brings in new customers and keeps them coming back again and again.”
The Americans with Disabilities Act (ADA) and some state law counterparts require businesses that serve the public to remove barriers from older buildings and to design and build new facilities to provide access to customers with disabilities. A key component of ADA compliance is maintaining those features so they remain usable.
In general, the ADA requires all features of a retail establishment be accessible, including parking, the route into and through the store, display of goods, restrooms, fitting rooms and elevators, and sales counters and customer information, including signage and emergency systems.
In recent years, law firms across the country have been filing suits alleging ADA violations against free-standing retail stores, as well as those in malls and outlet centers. One of the major issues is access into the store. If your storefront has any steps, ramps are a necessity for wheelchair or other mobility device access, unless they are not “readily achievable.” Ramps that are readily achievable should have a gentle incline (no steeper than a 1:12 slope), handrails on both sides, and a non-slip surface.
Gift Cards
To redeem or not redeem — that is the question. State laws mandating that consumers be allowed to redeem a gift card for cash when the gift card balance falls below a certain dollar amount continue to expose companies to consumer complaints and class action litigation. Fourteen states and Puerto Rico have rules that allow a consumer to redeem a gift card for cash when the gift card balance falls below a certain dollar amount, typically below $1, $5, or $10. Massachusetts has a unique regime where the gift card holder can request the remaining value of a gift card in cash after at least 90% of the face value of the gift card has been redeemed. This means the threshold for cash redemption in Massachusetts varies based on the original face value of the gift card. Massachusetts also has different rules depending upon whether a gift card is reloadable or not.
Most gift card terms contain the catchall language that gift cards are “not redeemable for cash, unless required by law” but companies typically do not have the ability to track and parse out gift card purchasers by state, making it difficult if not impossible to comply with the rules on an individual state level. Companies also rarely provide training to in-store staff and customer service agents on how to handle or escalate cases when cash redemption is requested. Any company that sells gift cards or certificates to consumers should review their current gift card terms and internal policies and training on cash redemption requests.
Saks/Neiman Merger
The acquisition of Saks Fifth Avenue by Neiman Marcus Group made headlines as the transaction combined three luxury brands (Saks Fifth Avenue, Neiman Marcus, and Bergdorf Goodman). The newly established entity, Saks Global, is poised to significantly influence luxury consumers’ preferences, choices, and brand acceptance across various segments of the luxury market, potentially enhancing the overall shopping experience for luxury consumers. While this may benefit consumers, the same cannot be said for brands supplying Saks Fifth Avenue, Neiman Marcus, and Bergdorf Goodman. These brands will now have fewer buyers, as those who previously sold to each of the retailers separately will now deal exclusively with Saks Global. This could lead to brands facing pressure to lower their product prices for the newly merged brand and offer extended credit terms. As a unified entity, Saks Global’s increased negotiating power could compel vendors, particularly smaller ones previously dependent on wholesaling to Saks, Neiman Marcus, and Bergdorf Goodman, to meet its supply and demand criteria.
9. The Next Evolution of AI
As AI continues to develop at a rapid pace, even the most sophisticated general counsel and in-house legal teams will be hard pressed to keep up with the evolving legal landscape. While the Trump Administration seems poised to ease regulatory scrutiny on AI, much remains uncertain about their approach. Meanwhile, federal inaction is likely to invite more assertive policymaking at the state and local levels, with a focus on safety, bias, privacy, and sensitive use cases like employment, health care, and education, to name a few. Already, state data transparency laws in California and Colorado are poised to impose new levels of scrutiny on AI developers and deployers before the end of the year, which will require AI developers to make certain disclosures about the data that they are using to train their systems. In addition, certain industries will be subject to industry-specific AI-related legislation and regulation, including disclosure obligations for certain interactions between consumers and AI, as well as new obligations to conduct annual bias and impact assessments of their AI tools. Finally, the proliferation of AI agents that are capable of performing complex actions on behalf of consumers will raise new challenges for legal compliance and liability, particularly in areas such as product recommendations, personalized marketing, and automated customer service. For more on key AI legal issues, see here.
10. Bankruptcy, Initial Public Offerings, and Mergers and Acquisitions
Chapter 11 retail bankruptcies have hit an all-time high, including multiple chapter 22 filings (consecutive bankruptcy filings by discount retailers). Commercial real estate landlords, already reeling from the 2026 maturity wall and high interest rates, are facing substantial lease rejection damages claims. Vendors are facing unprecedented unpaid administrative claims leading to a crisis among the vendors that sell goods and services to retailers in chapter 11. This has led to a “vendor apocalypse” where vendors are not paid for both pre- and post-petition invoices. Opportunities are plentiful for distressed asset sales for buyers on the hunt for brands, inventory, and below market leases.
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