AI & Startup Law

What compliance does my AI product need in a regulated industry?

AI in regulated sectors layers AI-specific duties on existing law: HIPAA and Business Associate Agreements when a system touches protected health information, FCRA and ECOA adverse-action duties when a model drives a credit decline, and the FDA's medical-device framework. The FTC polices deceptive AI practices across sectors. Which regime applies turns on architecture — whether the system uses third-party APIs, trains on regulated data, or makes a consequential decision itself. Lysinski & Associates P.C. maps each product to its obligations.

What extra rules apply to AI in regulated sectors?

AI-specific duties layer on top of existing law — HIPAA and Business Associate Agreements for protected health information, FCRA and ECOA adverse-action requirements for credit decisions, and the FDA's framework for AI/ML-enabled medical devices.

The FTC also polices unfair or deceptive AI practices regardless of sector.

When does HIPAA apply to my AI health product?

When the system touches protected health information — and using a third-party AI API on that data generally requires a Business Associate Agreement.

The architecture — which services see the data — drives whether HIPAA attaches.

Can my AI model make automated credit decisions?

FCRA and ECOA adverse-action notice requirements attach when a model drives a decline — and whether the system 'makes' or merely 'assists' the decision is the key trigger.

That assist-versus-decide line is technical before it is legal.

What does the FDA require for AI clinical decision support?

The FDA has a framework for AI/ML-enabled medical devices; whether your tool is regulated turns on what clinical role it plays. Verify the current FDA framework, which continues to evolve. In Illinois, the Wellness and Oversight for Psychological Resources Act (HB 1806, effective August 1, 2025) also restricts AI from providing therapy or psychotherapy services except for defined administrative support.

Mapping the data flows and decision points to the obligations is the work. See the compliance-map page.

How do I know which regime applies?

Usually it turns on architecture — whether the system uses third-party APIs, trains on regulated data, or makes a consequential decision itself.

Mapping the data flows and decision points to the obligations is the work. See the compliance-map page.

Talk to an attorney who builds AI

Your AI product is ready — but if it makes a call on a loan, a diagnosis, or a treatment without the right compliance architecture, the regulator arrives before your first customer. Book a regulatory-mapping session. (773) 777-9888.

For the firm’s related legal service, see AI governance frameworks.

(773) 777-9888 · info@lysinski.com ·

Frequently asked questions

Does my AI health startup need HIPAA compliance?

If your system touches protected health information, yes — and using a third-party AI API on that data generally requires a Business Associate Agreement with that vendor. Whether HIPAA attaches depends on which components see the PHI.

Can my AI lending model decline applicants automatically?

FCRA and ECOA adverse-action requirements attach when a model drives a decline, including notice and reason-code obligations. Whether the model 'makes' the decision or merely assists a human reviewer is the key legal trigger.

What FDA rules apply to AI clinical decision support?

The FDA regulates AI/ML-enabled medical devices under an evolving framework, and whether your tool is covered turns on its clinical role — informational support versus driving a diagnosis or treatment decision. Verify the current FDA approach for your specific product.

What does 'automated decision' mean legally?

It is the line between a system that assists a human who makes the call and one that effectively makes the decision itself. That distinction is the core trigger in lending and healthcare, and it depends on how the system is actually built and used.

Does the FTC regulate AI even without a sector-specific law?

Yes. The FTC polices unfair or deceptive AI practices under Section 5 regardless of sector, which can reach claims about accuracy, capability, or data use even where no industry-specific statute applies.

How do I map my product to its obligations?

Start from the architecture: what data the system uses, whether it relies on third-party APIs, and where it makes or assists a consequential decision. Those facts determine whether HIPAA, FCRA, ECOA, or FDA rules attach.

More in AI & Startup Law

Additional Notice — Subject to Change; No Legal or Tax Advice; Specialized Counsel May Be Needed. The laws, regulations, and court decisions referenced on this page are subject to change and to differing interpretations, and their application depends on the specific facts of each situation. The information on this page is general information only, is subject to verification, and should not be relied upon. Nothing on this page is, or shall be deemed to be, legal advice, and nothing on this page is, or shall be deemed to be, tax advice. No attorney-client relationship is created by your use of this page. The Supreme Court of Illinois does not recognize certifications of specialties in the practice of law, and no certificate, award, or recognition is a requirement to practice law in Illinois. Depending on your circumstances, you may need to engage specialized counsel — for example, in securities and SEC compliance, intellectual property (including patents and trademarks), labor and employment, and jurisdiction-specific or multi-state issues, among others. Any tax matter should be addressed with a qualified certified public accountant (CPA) or other qualified tax adviser. Before acting on anything described here, consult a licensed attorney — and, for any tax question, a CPA — about your specific situation.