The Federal Trade Commission (FTC) on Wednesday announced final rules to ban fake online reviews and testimonials and allow for civil penalties against violators.
The rules aim to curb the amount of reviews generated by artificial intelligence or written by people who misrepresent their experiences with products or services in exchange for compensation, and also target the practice of quietly suppressing negative reviews.
“Fake reviews not only waste people’s time and money, they pollute the marketplace and take business away from honest competitors,” said FTC Chairman Lina Khan. News Release.
“By strengthening the FTC’s anti-deceptive advertising toolkit, the final rule will protect Americans from being deceived, put a flag on companies that illegally game the system, and promote fair, honest, and competitive markets,” she added.
The agency proposed the rule in June 2023 and held an informal public hearing in February 2024. Since then, the agency has incorporated public input into the provisions of the final rule released Wednesday.
The final rule prohibits companies from creating, selling, or buying reviews that do not disclose that they were generated by artificial intelligence or that they were written by people who have not actually used the product or who falsely claim to have had a positive experience.
Companies cannot force company insiders to write such reviews, and they cannot disseminate reviews or testimonials if they “knew or should have known that the review or testimonial was fake or false.”
The final rules prohibit companies from offering users incentives of any kind, including compensation, to write reviews that express a particular sentiment, positive or negative. The new final rules also provide that the “conditional nature” of the compensation may be “expressly or implicitly conveyed.”
The new rules prohibit directors and managers from submitting reviews that do not disclose their connection to the business, and similarly impose certain disclosure obligations on directors and managers when soliciting reviews from relatives.
The final rules prohibit companies from inventing false reasons to suppress negative reviews and also prohibit “trading in false indicators of social media influence, such as followers or views generated by bots or hijacked accounts.”
This provision has been updated to clarify that it is limited to situations where the purchaser “knew or should have known” that the indicator was fake.
