The Federal Trade Commission (FTC) on Wednesday announced a final rule that prohibits companies from creating fake online reviews and testimonials for products, according to a press release from the agency. The new rule also requires disclosure of insider reviews from people associated with the company receiving the review, bars companies from suppressing bad reviews, and prohibits the purchase of social media influence through fake followers or bots.
The FTC began its crackdown on fake reviews in November 2022 and last held a hearing on the rule in February 2024. That hearing allowed the agency to solicit feedback and make changes to the proposals, clarifying a number of points that may have been confusing for consumers and businesses.
The ban on fake reviews includes AI-generated reviews and real people who have no experience with the product being reviewed. Buying reviews, whether positive or negative, is also prohibited in any form.
So-called “insider” reviews are prohibited for employees of a particular company. However, the FTC also requires that people with a “material connection” to the company, including “immediate relatives” of employees, are also prohibited from leaving reviews.
According to a press release from the FTC on Wednesday, the new rule will take effect 60 days after its publication in the Federal Register. Violations will be subject to civil, not criminal, penalties. The vote for the new rule ended 5-0.
“Fake reviews not only waste time and money, they also pollute the marketplace and drive business away from honest competitors,” FTC Chair Lina M. Khan said in a press release. “By strengthening the FTC’s tools to combat deceptive advertising, the final rule will protect Americans from fraud, hold companies that improperly exploit the system accountable, and promote fair, honest, and competitive markets.”
The FTC has soared during the Biden years, stepping up enforcement of rules to protect consumers, trying to crack down on fraud and keep companies in check. Big Tech has also come under the agency’s scrutiny, making Khan the target of attacks from many in the business community who see her as too forceful.
Several media reports suggest that some major Democratic donors to Kamala Harris’ presidential campaign against Donald Trump are trying to force her out of office. But even if Harris wins, it’s not clear what she might choose. Curiously, Trump’s vice presidential candidate JD Vance has praised Khan for her stance against Big Tech, as the New York Times recently noted.
