The FTC finalizes its rules clamping down on fake online reviews
The new rules prohibit the selling of fake and AI-generated reviews and testimonials in several forms.
The Federal Trade Commission’s (FTC) crackdown on fabricated reviews and fake consumer and celebrity testimonials has produced new official federal regulations to prevent the use of these practices on websites and e-commerce hubs. The FTC approved the new rules against the buying and selling of fake reviews and product testimonials with a 5-0 vote on Wednesday. The rules will become effective in 60 days.
The new FTC rules address the practice of buying and selling fake consumer reviews, including the use of AI-generated consumer and celebrity testimonials for products or services. They also prevent “providing compensation or other incentives conditioned on the writing of consumer reviews expressing a particular sentiment, either positive or negative” and prohibit “a business from misrepresenting that a website or entity it controls provides independent reviews or opinions” about products or services, according to a statement released by the FTC.
The formal ban also comes with stiff penalties for violators of the new rules. Fines could reach as high as $50,000 per violation.
The FTC officially announced its intent to seek new rules for such practices last October. The Commission has been trying to get control of fake online reviews and testimonials for years. The first such case was resolved in 2019 against the Amazon seller Cure Encapsulations Inc. The company was accused of paying for fake feedback for its weight-loss products from the amazonvierifiedreviews.com website, and the FTC slapped them with a $12.8 million fine. The FTC has also investigated similar cases against the supplement maker The Bountiful Company for “review hijacking” its products’ reviews and ratings on Amazon that ended with a $600,000 fine, and the skincare maker Sunday Riley that created fake online reviews by ordering employees to write them.
The government isn’t the only entity trying to discourage the buying and selling of fake reviews. The service recommendation website Yelp created a database that lists businesses who received warnings for posting or buying fake reviews for its Yelp page.