FTC bans fake reviews and testimonials in the US

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The Federal Trade Commission (FTC) has announced a final ruling to combat fake online reviews and testimonials.

The final rule prohibits fake or false consumer reviews, consumer testimonials and celebrity testimonials. This includes AI-generated fake reviews or reviews from someone who did not have actual experience with the business or its products or services.

Businesses also cannot buy positive or negative reviews. The final rule prohibits businesses from providing compensation or other incentives for writing positive or negative reviews.

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In addition, the final rule does not allow certain reviews and testimonials written by company insiders that fail to clearly disclose their association to the business.

On top of that, the final ruling prohibits a business from creating a company-controlled review website that falsely purports to provide independent reviews.

Review suppression is another factor as part of the final rule. Businesses are not allowed to use unfounded or groundless legal threats, physical threats, intimidation, or certain false public accusations to prevent or remove a negative consumer review.

The final rule also bars a business from misrepresenting that the reviews on a review portion of its website represent all or most of the reviews submitted when reviews have been suppressed based upon their ratings or negative sentiment.

Finally, the final rule prohibits anyone from selling or buying fake indicators of social media influence. This includes followers or views generated by a bot or hijacked account.

The new rule is set to go into effect later this year. Businesses who violate the rule will be fined US$51,755 per violation. However, the courts will also decide how to calculate the number of violations in a given case, according to a document seen by MARKETING-INTERACTIVE.

Fake reviews are not unheard of. In July 2022, Amazon filed a lawsuit against Facebook groups for soliciting fake reviews.

The lawsuit was against administrators of more than 10,000 Facebook groups for attempting to orchestrate fake reviews on the eCommerce platform in exchange for money or free products.

According to a statement by Amazon, these Facebook groups are set up to recruit individuals willing to post incentivised and misleading reviews on its stores in the US, UK, Germany, France, Italy, Spain, and Japan.

For instance, one of the groups, “Amazon Product Review,” had more than 43,000 members and allegedly offered refunds or other payments to buyers willing to leave bogus reviews on products such as camera tripods and car stereos.

Amazon will also use information discovered in the lawsuit to identify and remove fake reviews commissioned by fraudsters that have not already been detected by the eCommerce platform.

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