The Federal Trade Commission (FTC) has unveiled a new ruling aimed at tackling the issue of fake online reviews and testimonials. The final rule, set to be enforced later this year, targets a range of deceptive practices related to consumer feedback.
Under the new regulations, businesses are prohibited from using fake or false reviews, including those generated by artificial intelligence or written by individuals who have not actually used the business’s products or services. Additionally, the rule bans the purchase of positive or negative reviews, including any form of compensation or incentives for writing such reviews.
The rule also addresses the issue of misleading endorsements. Reviews and testimonials authored by company insiders must clearly disclose their affiliation with the business. Moreover, businesses are forbidden from creating company-controlled review sites that falsely claim to offer independent reviews.
Another significant aspect of the rule is its stance on review suppression. Companies cannot use unfounded legal threats, intimidation, or false public accusations to remove or prevent negative reviews. Additionally, businesses are not allowed to misrepresent that their website reviews represent the majority of feedback when negative reviews have been suppressed.
The new rule extends to social media as well, prohibiting the sale or purchase of fake indicators of influence, such as followers or views generated by bots or compromised accounts. Violations of the rule will incur fines of $51,755 per infraction, with the courts determining how to count the number of violations in each case.
This crackdown on fake reviews comes amid broader scrutiny of deceptive practices. In July 2022, Amazon sued the administrators of over 10,000 Facebook groups accused of orchestrating fake reviews in exchange for money or free products. These groups were found to recruit individuals to post incentivized, misleading reviews across Amazon’s global platforms, including in the US, UK, Germany, France, Italy, Spain, and Japan. Amazon is using insights from the lawsuit to identify and remove fraudulent reviews that have evaded detection.
The FTC’s final rule aims to enhance transparency and trust in online reviews, ensuring that consumer feedback is authentic and reliable.
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