The FTC has finalized its new rule banning fake consumer reviews. The rule, which takes effect in October, prohibits the sale or purchase of fake consumer reviews or testimonials, the purchase of positive or negative consumer reviews, the creation of consumer reviews or testimonials by certain insiders without clear disclosure of their relationships, the creation of a company-controlled review website that falsely purports to provide independent reviews, certain review suppression practices, and the sale or purchase of fake indicators of social media influence. These are all common tactics that, according to the FTC, distort the signals consumers rely on when choosing products.
The main components of the rule are as follows:
- Fake or false consumer reviews, consumer testimonials and celebrity testimonials: The final rule prohibits reviews and testimonials that falsely claim to be from someone who doesn’t exist, such as fake reviews generated by AI, or who have no actual experience with the company or its products or services. As with previous policies, the review must not misrepresent the experience of the person who wrote it.
- Buy positive or negative reviews: The final rule prohibits companies from offering compensation or other incentives for writing customer reviews that express a particular opinion, whether positive or negative. It clarifies that the conditional nature of the offer of compensation or incentives can be expressed explicitly or implicitly. The common practice of buying reviews is also prohibited.
- Insider reviews and customer reports: The final rule prohibits certain reviews and testimonials from company insiders that do not clearly and conspicuously disclose the author’s material connection to the company. This was arguably already required in the endorsement and testimonial guides, but is now part of the rule. The rule prohibits a company from disseminating an undisclosed testimonial from an officer, manager, employee, or agent. Finally, requirements are imposed 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 from employees’ or agents’ immediate relatives.
- Company-controlled review websites: The final rule prohibits companies from falsely claiming that a website or company they control provides independent reviews or opinions about a product or service category that includes their own products or services, which has been the subject of private litigation in some industries.
- Suppression of reviews: The final rule prohibits businesses from using unfounded or baseless legal threats, physical threats, intimidation, or certain false public accusations to prevent or remove a negative customer review. The final rule also prohibits businesses from falsely claiming that the reviews in a review section of their website represent all or most of the reviews submitted when reviews have been suppressed based on their ratings or negative sentiment. This means that “sorting” reviews can be risky.
- Abuse of fake social media indicators: The rule prohibits the sale or purchase of fake indicators of social media influence, such as followers or views generated by a bot or hijacked account.
By implementing a rule, the FTC is sending a clear message that these issues are a priority and that it will seek civil penalties to enforce them. Companies that rely on user reviews should make sure they have user review policies in place and that they are consistently enforced and up to date.
