FTC Strengthens Rules to Curb Fake Reviews
Last week, the Federal Trade Commission (FTC) published a ruling designed to reduce the number of false reviews for products and services in an effort to protect consumers.
This ruling will empower the FTC to seek civil penalties against violators, which the agency believes necessary to effectively deter wrongdoers. The ruling prohibits a number of activities that lead to fraudulent reviews that can negatively impact consumers.
“Fake reviews not only waste people’s time and money, but also pollute the marketplace and divert business away from honest competitors,” FTC Chair Lina M. Khan said. “By strengthening the FTC’s toolkit to fight deceptive advertising, the final rule will protect Americans from getting cheated, put businesses that unlawfully game the system on notice, and promote markets that are fair, honest, and competitive.”
The FTC will ban fake or false reviews – that is to say, reviews or testimonials that are computer generated or submitted by a person that does not exist – and “seek civil penalties against knowing violators.” Reviews must only come from people who have experienced the product or service. This also bars companies from buying or selling positive or negative reviews, whether real or fake.
The rule also clarifies the level of transparency companies must provide relative to their reviews. The FTC prohibits companies from falsely advertising a company-controlled site as an independent review forum. Companies must also practice transparency when it comes to reviews on display.
For example, a company can’t claim the reviews section of its site represents a holistic voice of its customers if it regularly suppresses negative reviews. As well, company insiders cannot post reviews without disclosing their connection to the company.
The FTC sent initial notifications of the proposed ruling in November 2022 and June 2023. Following the public comments received, the agency updated and reworked the proposal to reach the final 5-0 vote published on August 14. The final rule will come into effect 60 days later.
