By: Pierre Zarokian
The Federal Trade Commission has announced a final rule on October 21, 2024, that will combat fake reviews and testimonials by prohibiting their buying or selling, allowing FTC to seek civil penalties of $51,744 per violation against knowing violators.
“Fake reviews waste people’s time and money and pollute the marketplace while diverting business away from honest competitors,” said FTC Chair Lina M. Khan. “The final rule will strengthen the FTC’s toolkit for fighting deceptive advertising, protect Americans from getting cheated, and put businesses on notice that unlawfully game the system while promoting markets that are fair, honest, and competitive.”
The final rule is the result of an advance notice of proposed rulemaking and a notice of proposed rulemaking announced in November 2022 and June 2023, respectively. The FTC also held an informal hearing on the proposed rule in February 2024. The Commission has made several clarifications and adjustments to its previous proposal in response to the comments submitted by the public.
Pierre Zarokian, CEO of Reputation Stars and an expert in Online Reputation Management, expressed support for the news. “I frequently get asked if I can provide fake reviews, and I always explain that it’s unethical. Instead, I encourage people to focus on improving their businesses to prevent negative reviews in the first place. I’m pleased that the FTC will now impose fines, as I believe it will make people think twice about pursuing fake reviews.”
The Final Rule Prohibits:
Fake or False Consumer Reviews, Consumer Testimonials, and Celebrity Endorsements
The rule will address reviews and testimonials that purport to be from a person who does not exist, such as AI-generated fake reviews, or who did not actually have an experience with the business or its products or services, or misrepresent the experience of the person providing it. It prohibits any business from manufacturing or selling such reviews or testimonials.
It also prohibits them from paying for such reviews, getting them from the company’s employees, or publishing such testimonials where the business knew or should have known that the reviews or testimonials were false or fake.
Rewarding Negative or Positive Reviews
The final rule prohibits businesses from offering any type of compensation or incentive that is contingent upon the consumer writing a review that expresses a stated sentiment, whether positive or negative. It makes clear that the conditional nature of the offer of compensation or incentive may be expressed or implied.
Insider Reviews and Customer Testimonials
The final rule prohibits the use of some reviews and testimonials in written form from insiders in the company when the material connection between the giver and the business is not clearly and conspicuously disclosed. It prohibits such reviews and testimonials by officers or managers.
It also makes it unlawful for a business to disseminate such a testimonial that the business should have known was by an officer, manager, employee or agent. It finally imposes requirements when the officers or managers solicit consumer reviews from their own immediate relatives, or from employees or agents, or when they tell the employees or agents to solicit reviews from relatives, and such solicitations result in reviews by immediate relatives of the employees or agents.
Company-Controlled Review Websites
The final rule also prohibits a business from falsely representing that a website or other entity it controls offers independent reviews or opinions of a type of product or service that includes the business’s own products or services.
Review Suppression
The final rule prohibits a business from using groundless or baseless legal threats, physical threats, intimidation, or certain false public accusations to suppress or eliminate a negative consumer review. The final rule also prohibits businesses from misrepresenting that reviews on a review portion of its website represent all or most of the reviews submitted when reviews have been suppressed based on their ratings or negative sentiment.
Buying Fake Followers
The final rule prohibits anyone from selling or buying fake social media followers or likes, including bot-generated or account-hijacked followers or views. The prohibition is limited to situations in which a buyer knew or should have known that the indicators were fabricated and would misrepresent its own influence or importance for a commercial purpose.
Published By: Aize Perez
