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New FTC rule bans businesses from using fake reviews, using threats to remove bad reviews

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New FTC rule bans businesses from using fake reviews, using threats to remove bad reviews

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The Federal Trade Commission announced a new ban on businesses using fake reviews and testimonials.

Here’s what consumers and business owners should know.  

FTC ban on fake reviews

The FTC announced on Aug. 15 a new rule banning fake testimonials and reviews, allowing the agency to deter AI-generated fake reviews now and enforce civil penalties against violators who knowingly sell or purchase such content.

“Fake reviews not only waste people’s time and money, but also pollute the marketplace and divert business away from honest competitors,” Lina M. Khan said, FTC chair. “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 final ruling this month comes after an advance notice of proposed rulemaking in November 2022, a notice of proposed rulemaking in June 2023 and an informal hearing on the proposed rule in February of this year.  

Details on the ban 

After considering public comments, the FTC made clarifications and adjustments to previous rule proposals to come up with the following parameters of the final ruling: 

  • Reviews and testimonials that misrepresent that they are created by someone who does not exist, such as AI-generated content; by someone who does not have real experience with the business, its products, or its services; or misrepresent the experience of the person authoring the review or testimonial.  
  • Businesses cannot provide compensation or other incentives in exchange for writing customer reviews that express a particular opinion, positive or negative. “The conditional nature of the offer of compensation or incentive may be expressly or implicitly conveyed,” the FTC said. 

  • Certain reviews and testimonials written by company insiders that fail to “clearly and conspicuously” disclose the author’s business ties are prohibited, such as those given by officers or managers. This portion includes requirements when officers or managers request reviews from their relatives, employees or agents, or when these people are instructed to solicit reviews from their relatives.  
  • Businesses are prohibited from misrepresenting that a website or entity under its control provides independent reviews or opinions about its products or services.  

For consumers who are frustrated by negative reviews being removed from business pages or fake social media status being presented online, the FTC also included coverage for those issues, too:  

  • The ban prohibits businesses from “using unfounded or groundless” legal or physical threats, intimidation or certain false public accusations to prevent or remove negative consumer reviews. Businesses cannot state that reviews on their website represent all or most of the reviews submitted if reviews have been suppressed based on their ratings or negative sentiments.  
  • It is prohibited for anyone to buy or sell “fake indicators of social media influence,” which includes followers or views generated by a bot or hijacked account. This is limited to situations where the buyer knew or should have known that the followers or views were fake and misrepresented their influence or importance for a commercial purpose.  

More changes: New rules on real estate commissions that start Aug. 17 provide ‘opportunities and risks’

When will the ban take effect? 

The FTC approved the ban in a 5-0 vote. The rule will become effective 60 days after the date it is published in the Federal Register, the agency said. 

Got a tip or a story idea? Contact Krys’tal Griffin at kgriffin@delawareonline.com. 

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