Tell me if this has ever happened to you. You’re shopping online and looking for a widget. You go to a popular online retailer and see there are hundreds of widgets. You want the best widget you can get, so you read the online reviews and they all say how great the product is. You buy the widget with the best reviews, bring it home, and it falls apart because it’s junk. Sound familiar? Well, these fake online reviews are now going to be illegal thanks to the Federal Trade Commission.
Can you believe that between 30% and 40% of online reviews are fake? That’s a lot of bad/fake reviews for honest people searching for products online.
According to the FTC press release announcing the new online reviews rule, companies will be “prohibited” from
- Fake or false consumer reviews, consumer reports and celebrity testimonials
- Buy positive or negative reviews
- Insider reviews and customer reports
- Corporate-controlled review websites
- Suppression of reviews
- Abuse of fake social media indicators
Lina Khan, Chair of the FTC – “Fake reviews not only waste time and money, they also pollute the marketplace and divert business from honest competitors. By strengthening the FTC’s tools to combat deceptive advertising, the final rule will protect Americans from fraud, hold companies that illegally game the system accountable, and promote fair, honest, and competitive markets.”
Currently, if a review is found to be knowingly fake, “the maximum civil penalty is currently $51,744 per violation, but courts must consider the statutory factors set forth in Section 5(m)(1)(C) of the FTC Act and may impose significantly lower penalties per violation.”
The FTC has noted in its rules that courts will have to determine the new penalties on a case-by-case basis. However, the new rules will make it easier to prosecute these bogus reviews.
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