The Federal Trade Commission announced Aug. 14 a final rule that prohibits the sale or purchase of fake reviews and testimonials, and the agency can seek civil penalties for violations.
By giving the FTC teeth against bad actors, the ruling will enhance deterrence and protect consumers from getting cheated, according to the FTC press release.
“Fake reviews not only waste people’s time and money, but also pollute the marketplace and divert business away from honest competitors,” said FTC chair Lina M. Khan.
The FTC ruling:
- Bans reviews generated by artificial intelligence or other non-existent personas.
- Bans reviews from people who did not have actual experience with a business or its products or services.
- Prohibits businesses from providing compensation or other incentives conditioned on the writing of consumer reviews expressing a particular sentiment, either positive or negative.
- Bans businesses from misrepresenting that a website or entity it controls provides independent reviews or opinions about a category of products or services that includes its own products or services.
- Bans a business from suppressing negative reviews or using unfounded or groundless legal threats, physical threats, intimidation, or certain false public accusations to prevent or remove a negative consumer review.
- Prohibits anyone from selling or buying fake indicators of social media influence, such as followers or views generated by a bot or hijacked account.
Fake reviews hurt both consumers and businesses. “Fake, false, and manipulated online reviews allow companies to surpass competitors. One study found that it only takes 50 fake reviews for a seller to pass any of its competitors in terms of visibility,” according to the ruling.
In recent years, fake reviews have become a problem on marketplaces such as Amazon.com Inc. In 2022, Amazon filed a lawsuit against the administrators of more than 10,000 Facebook groups that attempt to orchestrate fake reviews on Amazon in exchange for money or free products. The web giant has more than 12,000 global employees dedicated to protecting its stores from fraud and abuse, including fake reviews. Amazon said it stopped more than 200 million suspected fake reviews in 2022.
The FTC ruling will be effective in October. Even if merchants are not partaking in these nefarious practices themselves, they will need to ensure that their customer review vendors also comply with the ruling, said Katherine Armstrong, deputy director, National Advertising Division at nonprofit organization BBB National Programs.
“Retailers should be vigilant when working with third-party contractors on their marketing efforts,” Armstrong said. “Non-compliance by a third-party vendor would likely reflect poorly on a retailer.”
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