Connecticut & Colorado AI Laws: Why Your US Privacy Policy Needs an Update by July 2026

When the topic of AI regulation comes up, most US-based small businesses and e-commerce stores immediately think of the EU AI Act. Because they don't serve European customers, they assume they are exempt from AI compliance.

This is a dangerous misconception.

While the federal government has yet to pass a comprehensive AI law, individual states have quietly amended their consumer privacy laws to include strict AI disclosure mandates. Most notably, Connecticut and Colorado have enacted AI-specific regulations that take effect in the summer of 2026.

If your website uses AI chatbots, automated decision-making, or collects data to train AI models, your US privacy policy needs an immediate update. Here is what you need to know about the Connecticut CTDPA amendment and the Colorado AI Act (SB24-205).

1. The Connecticut CTDPA AI Amendment (July 1, 2026)

The Connecticut Data Privacy Act (CTDPA) was originally passed to give consumers control over their personal data. However, a recent amendment (Public Act No. 25-113) quietly added a significant AI disclosure mandate.

Effective July 1, 2026, any business subject to the CTDPA must update their consumer-facing privacy notices to include a clear and conspicuous statement disclosing whether they collect, use, or sell personal data for the purpose of training artificial intelligence systems, specifically Large Language Models (LLMs).

Key Requirements:

• Broad Applicability: This applies whether you use the data internally to train your own models or sell it to third parties.
• Vendor Liability: It also applies if your third-party vendors (like SaaS tools or customer support widgets) use your users' data for training.
• No "High-Risk" Threshold: Unlike other laws, Connecticut's amendment applies to any use of personal data in training LLMs, not just "high-risk" automated decision-making.

2. The Colorado AI Act SB24-205 (June 30, 2026)

Colorado took a different approach, passing the Colorado Artificial Intelligence Act (CAIA), also known as SB24-205. This makes Colorado the first US state to enact comprehensive, cross-sector AI regulation. It takes effect on June 30, 2026.

Colorado's law focuses heavily on "high-risk" AI systems—systems that make or materially influence decisions about a Colorado resident's employment, housing, credit, insurance, education, healthcare, or access to government services.

Website Disclosure Requirements:

If you are a "deployer" of a high-risk AI system, you must maintain publicly accessible disclosures on your website. Your privacy policy or a dedicated AI notice must explain:

• The types of high-risk AI systems you deploy.
• How you manage the risks of algorithmic discrimination.
• The nature of the data processed by the AI system.

3. Does This Apply to Small Businesses?

A common question is whether these state laws apply to small businesses outside of those specific states.

Yes, they likely do. Both the CTDPA and the Colorado Privacy Act (which the AI Act builds upon) have jurisdictional thresholds based on the number of consumers processed, not physical location.

For example, the CTDPA applies to entities that control or process the personal data of at least 35,000 Connecticut consumers, or derive more than 25% of their gross revenue from the sale of personal data and process the data of at least 10,000 consumers. If you run a successful national e-commerce store or a popular SaaS app, you can easily hit these thresholds.

4. How to Update Your US Privacy Policy

To prepare for the July 2026 deadlines, you need to audit your AI usage and update your privacy policy.

1. Audit Your Vendors: Check the terms of service for your chatbot provider, CRM, and marketing tools. Are they using your data to train their AI?
2. Add an AI Section: Create a dedicated section in your privacy policy addressing Artificial Intelligence.
3. Disclose Training Data: Explicitly state whether user data is used to train LLMs (to satisfy Connecticut).
4. Disclose High-Risk Systems: If applicable, disclose the use of high-risk automated decision-making (to satisfy Colorado).

5. Generate a Compliant Policy Instantly

Keeping track of the patchwork of US state privacy laws is exhausting. Instead of paying thousands of dollars in legal fees, you can use PrivacyPolicyGen.io.

Our generator is constantly updated to reflect the latest state-level amendments, including the Connecticut CTDPA AI mandate and the Colorado AI Act.

Simply select "United States" as your jurisdiction, answer a few questions about your AI usage, and our system will generate a comprehensive privacy policy that covers all 50 states.

6. Frequently Asked Questions (FAQ)

7. Conclusion

The era of unregulated AI in the United States is ending. While federal action stalls, states like Connecticut and Colorado are stepping up with strict disclosure mandates. Don't let the July 2026 deadlines catch you off guard.

Update your US Privacy Policy today to ensure full compliance with the latest state AI laws.