The Federal Trade Commission (FTC) unveiled a groundbreaking rule on Wednesday designed to curb the growing problem of fake online reviews and testimonials. This new regulation, often referred to as the “FTC ban on fake reviews,” strictly prohibits the creation, sale, and distribution of deceptive reviews and testimonials. By implementing this rule, the FTC aims to hold those responsible accountable, enabling the agency to seek civil penalties from violators.
FTC Chair Lina Khan highlighted the detrimental effects of fake reviews on both consumers and the marketplace. “Fake reviews not only waste people’s time and money, but also pollute the marketplace and divert business away from honest competitors,” Khan emphasized. The rule is intended to protect consumers from misleading practices, ensuring that the digital marketplace remains fair, competitive, and trustworthy.
The final rule, which has been in development since June 2023, includes several key provisions targeting various deceptive practices. One of the most significant aspects of the rule is its focus on transparency and the disclosure of fake testimonials. Specifically, the rule bans reviews that do not disclose their origin, whether they were generated by artificial intelligence or written by individuals who have never actually used the product or service. Moreover, companies are no longer allowed to compel employees or insiders to produce fake testimonials.
In addition, the rule prohibits businesses from suppressing negative reviews through deceptive means, such as fabricating reasons to remove or hide unfavorable feedback. To further promote transparency, companies must now disclose any relationships between reviewers and the business itself. For example, if a review is written by an employee or a relative of a company officer, this connection must be clearly stated.
Another critical component of the rule targets the burgeoning issue of fake social media influence, particularly the purchase of bot followers and fake engagement metrics. The updated rule specifies that businesses cannot buy or sell these fake indicators of influence if they “knew or should have known” that the metrics were artificially generated.
With the implementation of this rule, the FTC seeks to eliminate deceptive practices in the online review space, holding businesses accountable for misleading consumers. By ensuring that reviews and testimonials are genuine and truthful, the rule aims to foster a more transparent and fair digital marketplace, benefiting both consumers and ethical businesses alike.
