The FTC announced final rules to combat fake reviews and testimonials by prohibiting their sale or purchase. The new rules will also allow the agency to seek civil penalties against known violators.
FTC Chair Lina Khan wrote, “Fake reviews not only waste people’s time and money, but also pollute the marketplace and divert business away from honest competitors. By strengthening the FTC’s toolkit to fight deceptive advertising, the final rule will protect Americans from getting cheated, put businesses that unlawfully game the system on notice, and promote markets that are fair, honest, and competitive.”
The final rules prohibit:
- Fake or False Consumer Reviews, Consumer Testimonials, and Celebrity Testimonials – This rule not only prohibits review marketplaces from selling fake reviews, but also prohibits businesses from buying the reviews, an important distinction that puts both sides of the fake-review equation on blast.
- Buying Positive or Negative Reviews – Prohibits businesses from providing compensation or other incentives for writing a particularly positive or negative review. From what I'm understanding, merchants can still offer an incentive for writing a review, but can't expressly or implicitly dictate the tone of the review. This one may need some additional clarification from the FTC.
- Insider Reviews and Consumer Testimonials – This one prohibits employees and their friends and family from writing reviews for the company without disclosing their relationship.
- Company-Controlled Review Websites – Prohibits a company from misrepresenting that a website it controls provides independent reviews that include its own products or services. So for example, voting your own products #1 by a third-party blog that you control.
- Review Suppression – Prohibits a business from using legal threats, physical threats, or other forms of intimidation to prevent or remove a negative consumer review, as well as bars a business from saying that the reviews on its website represent all or most of the reviews submitted, when in actuality some reviews have been suppressed based on their ratings or negative sentiment.
- Misuse of Fake Social Media Indicators – Prohibits anyone from selling or buying fake social media followers or views generated by bots or hijacked accounts.
Fines could reach as high as $50,000 per violation.
How will the FTC enforce these new rules?
The answer to that question is TBD. Some of the practices mentioned above are so rampant in e-commerce and other industries that enforcement may be near impossible. Especially the rule about friends and family not leaving fake reviews! How will the FTC know that a plumber's brother-in-law left a five star review?
The final rule announcement follows an advanced notice of proposed rulemaking announced in Nov 2022 and a notice of proposed rulemaking in June 2023. The FTC also held an informal hearing on the proposed rule in Feb 2024 — so these rules aren't coming out of thin air. The rules will become effective within the next 60 days.