The Federal Trade Commission (FTC) announced a final rule aimed at combating fake reviews and testimonials by prohibiting their sale or purchase. This new regulation also empowers the agency to seek civil penalties against violators.
"Fake reviews not only waste people’s time and money, but also pollute the marketplace and divert business away from honest competitors," said FTC Chair Lina M. Khan. "By strengthening the FTC’s toolkit to fight deceptive advertising, the final rule will protect Americans from getting cheated, put businesses that unlawfully game the system on notice, and promote markets that are fair, honest, and competitive."
The announcement follows an advance notice of proposed rulemaking in November 2022 and a notice of proposed rulemaking in June 2023. An informal hearing on the proposed rule was held in February 2024. In response to public comments, several clarifications and adjustments were made to the initial proposal.
The final rule addresses several practices:
- Fake or False Consumer Reviews: It prohibits businesses from creating or selling reviews or testimonials that misrepresent actual experiences or are generated by non-existent individuals.
- Buying Positive or Negative Reviews: The rule forbids businesses from providing compensation for consumer reviews expressing specific sentiments.
- Insider Reviews: It restricts company insiders from writing undisclosed reviews and imposes requirements for soliciting reviews from relatives or employees.
- Company-Controlled Review Websites: Businesses cannot misrepresent websites they control as independent review sources.
- Review Suppression: The rule bars businesses from using threats or false accusations to suppress negative reviews.
- Misuse of Fake Social Media Indicators: Selling or buying fake social media influence indicators is prohibited if it misrepresents commercial influence.
This regulation aims to enhance deterrence following limitations imposed by the Supreme Court's decision in AMG Capital Management LLC v. FTC, which affected the FTC's ability to seek monetary relief under the FTC Act.
The Commission voted unanimously (5-0) to approve the final rule. It will take effect 60 days after publication in the Federal Register.
Key staff members involved include Michael Ostheimer and Michael Atleson from the FTC’s Bureau of Consumer Protection.
The Federal Trade Commission continues its mission to promote competition while protecting and educating consumers about fraud and bad business practices through various platforms including consumer.ftc.gov.
