Federal Trade Commission Introduces Rule Banning Fake Reviews and Testimonials

The Federal Trade Commission (FTC) has introduced a new rule aimed at curbing the spread of fake reviews and testimonials, a significant step towards ensuring honesty in online marketplaces. This rule, announced 8/14/2024, prohibits the creation, sale, and use of misleading or fabricated reviews. Additionally, it grants the FTC the authority to impose civil penalties on those who knowingly engage in these deceptive practices, thereby enhancing its ability to enforce fair advertising standards.

Key aspects of the rule include:

1. Ban on Fabricated Reviews and Testimonials: The rule targets reviews that are artificially generated, written by individuals without firsthand experience, or that inaccurately portray a user’s experience. Businesses are now prohibited from creating, selling, or buying such false reviews.
2. Prohibition of Paid Reviews: The rule forbids businesses from offering any form of compensation or incentives in exchange for reviews that are meant to express a particular opinion, whether positive or negative.
3. Regulation of Insider Reviews: Reviews from company insiders, such as executives or employees, are now banned unless there is a clear disclosure of their relationship to the company. The rule also restricts businesses from promoting testimonials that they should have known were from these insiders.
4. Transparency in Review Websites: The rule prevents businesses from falsely presenting a review website they control as independent, particularly when it includes reviews of their own products or services.
5. Protection Against Review Suppression: Businesses are now barred from using intimidation, unfounded legal threats, or false claims to suppress negative reviews or mislead consumers about the completeness of reviews on their platforms.
6. Restrictions on Fake Social Media Metrics: The rule also addresses the sale and purchase of fake social media metrics, such as followers or views, when they are used to deceive others about a business’s influence or reputation.

This new rule is part of the FTC’s ongoing effort to promote integrity in advertising, protecting both consumers and honest businesses from deceptive practices.