Have you ever questioned the authenticity of online reviews? You’re not alone. Fake reviews can be incredibly frustrating and misleading for consumers.
The good news? The Federal Trade Commission (FTC) just announced a major victory in the fight against deceptive reviews and testimonials! The FTC has a page to report fake reviews, see the link at the end of the story.
“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. “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.”
This latest regulation has been in the works for quite some time. The process began with an initial proposal back in November 2022, followed by a more detailed outline in June 2023. To get a better understanding of the issues at hand, the FTC held an open forum on the proposed rule earlier this year in February 2024.
What does it do?
Fake or False Consumer Reviews, Consumer Testimonials, and Celebrity Testimonials: The final rule addresses reviews and testimonials that misrepresent that they are by someone who does not exist, such as AI-generated fake reviews, or who did not have actual experience with the business or its products or services, or that misrepresent the experience of the person giving it. It prohibits businesses from creating or selling such reviews or testimonials. It also prohibits them from buying such reviews, procuring them from company insiders, or disseminating such testimonials, when the business knew or should have known that the reviews or testimonials were fake or false.
Buying Positive or Negative Reviews: The final rule prohibits businesses from providing compensation or other incentives conditioned on the writing of consumer reviews expressing a particular sentiment, either positive or negative. It clarifies that the conditional nature of the offer of compensation or incentive may be expressly or implicitly conveyed.
Insider Reviews and Consumer Testimonials: The final rule prohibits certain reviews and testimonials written by company insiders that fail to clearly and conspicuously disclose the giver’s material connection to the business. It prohibits such reviews and testimonials given by officers or managers. It also prohibits a business from disseminating such a testimonial that the business should have known was by an officer, manager, employee, or agent. Finally, it imposes requirements when officers or managers solicit consumer reviews from their own immediate relatives or from employees or agents – or when they tell employees or agents to solicit reviews from relatives and such solicitations result in reviews by immediate relatives of the employees or agents.
Company-Controlled Review Websites: The final rule prohibits a business 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.
Review Suppression: The final rule prohibits a business from using unfounded or groundless legal threats, physical threats, intimidation, or certain false public accusations to prevent or remove a negative consumer review. The final rule also bars a business from misrepresenting that the reviews on a review portion of its website represent all or most of the reviews submitted when reviews have been suppressed based upon their ratings or negative sentiment.
Misuse of Fake Social Media Indicators: The final rule prohibits anyone from selling or buying fake indicators of social media influence, such as followers or views generated by a bot or hijacked account. This prohibition is limited to situations in which the buyer knew or should have known that the indicators were fake and misrepresent the buyer’s influence or importance for a commercial purpose.
Why a New Rule?
Previously, the FTC relied on case-by-case enforcement, which, as they acknowledge, wasn’t always enough to deter businesses from using misleading reviews. Additionally, a Supreme Court decision limited the FTC’s ability to seek monetary compensation for harmed consumers.
What Does the New Rule Do?
The new rule passed with unanimous approval by the FTC Commission and It will become effective 60 days after publication in the Federal Register. The FTC has a page dedicated to this and you can report issues directly here. This new rule addresses these issues by Strengthening the FTC’s enforcement capabilities. It discourages businesses from using fake reviews through increased potential consequences The new rule also is providing clearer guidelines for businesses on using reviews and testimonials in a legal and ethical manner.
You can find the original story here at the FTC. Find more news at SyntheticNews.com.
