NEW YORK (AP) — Online reviews and testimonials are an important way for small businesses to attract new customers and increase sales of their products.
But fake reviews and testimonials are a constant problem for small businesses, many of which rely on referrals. Fake reviews can make it harder for people to trust what they read online and ultimately hurt businesses. Additionally, small businesses can become targets of scammers who leave negative reviews.
Avi Israeli, a dentist and owner of Sage Dental in Wall, NJ, which has 15 employees, said his business has been the target of fake and inaccurate reviews from people who have no connection to his practice. In addition, people from other states have confused his practice with a chain with a similar name and left inaccurate reviews that are difficult to delete.
“They have caused considerable damage to our reputation and are unfortunately very difficult and expensive to remove,” he said.
To combat the problem, the Federal Trade Commission (FTC) is cracking down on those who post fake reviews online. It has issued a final rule that prohibits the sale or purchase of such reviews and allows the agency to impose civil penalties on knowing violators.
The rule will take effect on October 21, 60 days after its publication in the Federal Register.
“Fake reviews not only waste people’s time and money, they also pollute the marketplace and drive business away from honest competitors,” said FTC Chair Lina M. Khan. She added that the rule “will protect Americans from fraud, hold companies that improperly exploit the system accountable, and promote markets that are fair, honest, and competitive.”
Specifically, the rule prohibits reviews and testimonials from people who don’t exist or are generated by AI, from people who have no experience with the company or products/services, or who misrepresent their experiences. It also prohibits companies from creating or selling reviews or testimonials. Companies that knowingly buy fake reviews, source them from company insiders, or distribute fake reviews will be penalized.
The rule also prohibits the sale or purchase of fake indicators of social media influence, such as followers or views generated by a bot or hijacked account.
Tanya Lamont, CEO of Conversational, a virtual receptionist service in Dallas, Texas, with 20 employees, said her business was hurt by fake reviews claiming her staff was unprofessional and mishandled confidential customer information, leading to a drop in new customer inquiries and some concern among existing customers.
To limit the damage, the company responded to each review, requested verification of reviewers’ information, and reported the reviews to the platforms on which they were published.
“Despite these efforts, the damage was already done, resulting in a temporary but significant decline in our revenue,” she said. She said the FTC’s crackdown was a “much-needed step” for companies like hers that rely on their online reputation to attract and retain customers.
“We hope that stronger enforcement will help protect businesses from the harm caused by these malicious acts,” she said.
Affected businesses can also report their concerns to the FTC. Consumers or business owners can report fraud, scams, and bad business practices at ReportFraud.ftc.gov.
