The Federal Trade Commission (FTC) is cracking down on fake reviews and testimonials, with a new rule that is close to being finalized. The agency is targeting companies that use phony followers and views to inflate their social media metrics. The FTC has previously fined a third-party Amazon seller for paying for fake reviews, and levied a penalty against the owner of a vitamin brand for false testimonials.
The proposed rule includes steep penalties for those caught peddling fake reviews and testimonials. Businesses that “buy, sell and manipulate online reviews” could face fines of up to $50,000 for each phony review, and for every time a consumer sees it. The FTC is determined to use all available means to combat deceptive advertising in the digital age and level the playing field for honest companies, according to Samuel Levine, the director of the FTC’s Bureau of Consumer Protection.
The rule aims to ban businesses from writing or selling reviews or testimonials by fictitious individuals or those without actual experience with the product or service. It also prohibits companies from obtaining or disseminating fake reviews that they knew or should have known were false. Review hijacking, offering compensation for reviews, and posting undisclosed reviews by managers and officers are also considered violations. Companies are still allowed to ask users to leave reviews, as long as they are genuine.
Furthermore, the FTC wants to outlaw the use of fake followers and views to manipulate social media numbers. This provision could have far-reaching consequences for influencers who rely on their follower count for brand deals. The proposed rule also addresses the use of AI chatbots to create fake reviews, as the emergence of such technology makes it easier for bad actors to deceive consumers.
The new rule will undergo a 60-day public comment period before finalization. While enforcing these measures may prove challenging, the FTC believes that a codified rule will strengthen its position in court. Dealing with overseas companies that engage in these practices may also present difficulties. Nevertheless, the formal ban and potential for substantial fines may serve as a deterrent for some businesses considering the use of fake reviews.
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Alex Smith is a writer and editor with over 10 years of experience. He has written extensively on a variety of topics, including technology, business, and personal finance. His work has been published in a number of magazines and newspapers, and he is also the author of two books. Alex is passionate about helping people learn and grow, and he believes that writing is a powerful tool for communication and understanding.
