On August 14, 2024, the Federal Trade Commission (FTC) finalized a rule that will combat fake reviews and testimonials by prohibiting their sale or purchase and allow the agency to seek civil penalties against knowing violators. FTC Chair Lina M. Khan said in a statement that the final rule will protect Americans from getting cheated and promote markets that are fair, honest, and competitive.
The final rule prohibits the following:
Fake or False Consumer Reviews, Consumer Testimonials, and Celebrity Testimonials. The final rule addresses fake reviews and testimonials, including those generated by AI or from people who haven't used the business's products or services. It prohibits businesses from creating, selling, buying, or sharing such misleading reviews, especially if they knew or should have known they were false.
Buying Positive or Negative Reviews. The final rule prohibits businesses from providing compensation or other incentives conditioned on the writing of consumer reviews expressing a particular sentiment, either positive or negative. It clarifies that the conditional nature of the offer of compensation or incentive may be expressly or implicitly conveyed.
Insider Reviews and Consumer Testimonial. The final rule bans reviews and testimonials written by company insiders unless they clearly disclose their connection to the business. It also prohibits these reviews from being given by officers or managers. Businesses can't share testimonials they should know come from officers, managers, employees, or agents. Additionally, it sets rules for when officers or managers ask their relatives or employees to leave reviews, including when employees or agents are instructed to solicit reviews from their own relatives.
Company-Controlled Review Websites. The final rule prohibits a business from misrepresenting that a website or entity it controls provides independent reviews or opinions about a category of products or services that includes its own products or services.
Review Suppression. The final rule bans businesses from using baseless legal threats, physical threats, intimidation, or false accusations to remove negative reviews. It also prohibits businesses from falsely claiming that the reviews on their website reflect all or most submissions when negative or low-rated reviews have been hidden.
Misuse of Fake Social Media Indicators. The final rule prohibits anyone from selling or buying fake indicators of social media influence, such as followers or views generated by a bot or hijacked account. This prohibition is limited to situations in which the buyer knew or should have known that the indicators were fake and misrepresent the buyer’s influence or importance for a commercial purpose.
The rule’s effective date is on October 21, 2024.
Read the FTC’s press release here.
The final rule can be found here.