As of October 22, 2024 FTC’s final rule banning fake online reviews and testimonials has come into effect.
- People rely on online reviews to make informed purchases and compare products. When companies use fake reviews, consumers get misled and honest businesses lose out. On October 22, 2024 FTC finalized a rule to prohibit fake reviews.
- Firms can use fake reviews to game the system in a host of ways—buying positive reviews for their products or services, suppressing negative ones, or generating bad reviews of their competitors. The final rule bans a range of tactics that pollute the market with fake reviews.
- According to the rule, FTC will be able to more effectively combat fake reviews by levying penalties on lawbreakers and returning money to those harmed.
- The rule follows a series FTC enforcement actions. FTC brought a case against Roomster, a rental listing platform that flooded the internet with thousands of fake 4- and 5-star reviews, misleading renters who were looking for affordable housing.
- FTC also took action against Fashion Nova for suppressing negative reviews. We found that the online retailer automatically posted 4. and 5-star reviews to its website, while blocking hundreds of thousands of bad reviews.
- From banning fake online reviews and government imposters to ending subscription traps and deceptive junk fees, FTC will keep using all our tools to take on the consumer indignities that siphon away people’s precious time and money.
The final rule prohibits:
- 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 Al-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.
More at FTC website
FTC’s Rule Banning Fake Online Reviews and Testimonials