The U.S. Federal Trade Commission (FTC) ban on fake and AI-generated customer reviews takes effect on Oct. 13, 2024. The final rule, which was announced in August, goes beyond a prohibition on fake product reviews. It also prohibits the buying and selling of followers and views on social media.
The rule was within the works for nearly two years. The effort began with an “advanced notice of potential rule making” in November 2022. It then traveled through the bureaucracy, including public comments in February 2024, before eventually becoming a final rule.
“Fake reviews not only waste people’s money and time, but in addition pollute the marketplace and divert business away from honest competitors,” said FTC Chair Lina M. Khan in a press release announcing the ultimate rule. “By strengthening the FTC’s toolkit to fight deceptive promoting, the ultimate rule will protect Americans from getting cheated, put businesses that unlawfully game the system on notice, and promote markets which can be fair, honest, and competitive.”
1. People rely on online reviews to make informed purchases and compare products.
When firms use fake reviews, consumers get misled and honest businesses lose out.
Today @FTC finalized a rule to ban fake reviews. https://t.co/llOOBvPRHY
— Lina Khan (@linakhanFTC) August 14, 2024
Once the rule takes effect, the FTC can have the power to pursue civil penalties against those that fail to comply. The FTC’s previous efforts to combat fake reviews on a case-by-case basis was stymied by a scarcity of penalties and enforceable rules, the commission said in a press release.
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What does the FTC rule for online reviews prohibit?
Fake or false consumer reviews, consumer testimonials and celebrity testimonials
The rule bans testimonials that claim to be made by someone who doesn’t exist. This a part of the rule is targeting AI-generated fake reviews particularly. But it also includes:
- Reviews and testimonials by individuals who didn’t have actual experience with the business or its services or products.
- Reviews and testimonials that misrepresent the experience of the person giving it.
- A prohibition against businesses creating or selling such reviews or testimonials and buying such reviews, procuring them from company insiders or disseminating such testimonials when the business knew or must have known the reviews or testimonials were fake or false.
Buying positive or negative reviews
The FTC rule also takes aim at businesses that provide compensation or other incentives conditioned on writing consumer reviews. Businesses can encourage consumers to depart reviews, but they can’t tell them what to say. The actual language here is, “expressing a specific sentiment, either positive or negative.” The FTC rule also clarifies that the conditional nature of the offer of compensation or incentive could also be expressly or implicitly conveyed.
Insider reviews and testimonials
In its rule, the FTC prohibits certain reviews and testimonials written by company insiders that fail to obviously and conspicuously disclose the fabric connection to the business. It prohibits reviews and testimonials given by officers or managers of the corporate.
Businesses cannot disseminate testimonials the business must have known was created by an officer, manager, worker or agent of the corporate.
The rule even takes insider reviews a step further, by imposing requirements when officers or managers solicit consumer reviews from their very own immediate family, or from employees or agents — or after they tell employees or agents to solicit reviews from their relatives.
Company-controlled review web sites
Business cannot misrepresent an internet site or entity it controls that gives independent reviews or opinions a couple of category of services or products that features its own services or products.
(*13*)Review suppression
The FTC is aiming to guard consumers that leave negative online reviews from any backlash. Its latest rule prohibits a business from using unfounded or groundless legal threats, physical threats, intimidation or certain false public accusations to stop or remove a negative consumer review.
Businesses are also barred from misrepresenting the reviews on a review portion of its website. The business cannot say the review portion of its website represents all or a lot of the reviews submitted if reviews were suppressed because of their rankings or negative sentiment.
Misuse of faux social media indicators
The rule bans anyone from selling or buying fake indicators of social media influence, comparable to followers or views generated by a bot or hijacked accounts. This prohibition is restricted to situations during which the client knew or must have known that the symptoms were fake and misrepresent the client’s influence or importance for a business purpose.
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Why we care: Online reviews and testimonials were certainly one of the features that promised to democratize the web. You could get the insights opinions directly from consumers. From consumer reviews on Amazon to B2B software review sites, buyers could gather opinions before making purchase decisions — until the system was inevitably gamed.
The FTC’s rule puts some teeth behind enforcement, but will, at best, make a really tiny dent in the issue. For one thing, the U.S. FTC only has jurisdiction within the United States, so the plethora of faux reviews flooding the web from other countries is unlikely to slow, let alone stop, due to the latest rule.
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