In August, the Federal Trade Commission (FTC) introduced a new rule impacting how businesses can use endorsements and testimonials in their marketing strategies. The rule, which will be enforced starting October 21, 2024, targets deceptive practices such as fake consumer reviews, suppressing negative feedback, purchasing positive reviews, and undisclosed insider reviews.
The FTC's regulation prohibits several testimonial-related activities. Businesses are barred from creating or distributing fake consumer reviews and offering compensation for biased reviews. They must disclose any relationships between reviewers and the business. Additionally, companies cannot misrepresent affiliated review websites as independent or buy fake social media influence indicators like followers or "likes."
Despite its comprehensive scope, the rule allows certain practices. Companies can still seek consumer reviews or celebrity endorsements but must not tie incentives to positive feedback. Unsolicited reviews from employees or relatives remain permissible without solicitation by business owners.
Business owners retain the right to suppress specific reviews if they believe them to be false, irrelevant, defamatory, abusive, or discriminatory. Reviews disclosing confidential information or containing another individual's likeness may also be removed.
The National Federation of Independent Business (NFIB) contributed to refining the rule by advocating for free speech protections. Their input led to amendments ensuring businesses aren't penalized for mistakenly suppressing reviews believed to be false or defamatory unless done with knowledge of their accuracy or reckless disregard.
Further details about the FTC Rule are available on the Commission’s website. NFIB continues its efforts to advise federal agencies on small business considerations when drafting regulations.
