The Federal Trade Commission (FTC) has taken a significant step in combating fake reviews and testimonials by announcing a final rule that prohibits their sale or purchase. This rule will allow the agency to seek civil penalties against knowing violators, aiming to protect consumers and promote fair competition in the marketplace.
FTC Chair Lina M. Khan emphasized the detrimental impact of fake reviews, stating that they not only waste people’s time and money but also distort the marketplace and divert business from honest competitors. By strengthening the FTC’s ability to combat deceptive advertising, the final rule aims to safeguard Americans from fraudulent practices and create a level playing field for businesses.
The final rule follows a series of regulatory steps, including an advance notice of proposed rulemaking and a notice of proposed rulemaking announced in previous years. The FTC also conducted an informal hearing to gather feedback from the public, leading to clarifications and adjustments in the final rule based on the received comments.
Key provisions of the final rule include prohibitions on fake or false consumer reviews, consumer testimonials, and celebrity testimonials. Businesses are not allowed to create or sell reviews that misrepresent the experience of the reviewer or provide compensation for positive or negative reviews. Additionally, the rule addresses insider reviews and consumer testimonials, requiring clear disclosure of any material connections to the business.
The final rule also prohibits businesses from misrepresenting company-controlled review websites as independent sources of information. It addresses review suppression tactics, such as legal threats or intimidation, aimed at removing negative consumer reviews. Furthermore, the rule prohibits the sale or purchase of fake social media indicators, such as followers or views, for commercial purposes.
The FTC highlighted the need for enhanced enforcement measures, citing the limitations imposed by the Supreme Court’s decision in AMG Capital Management LLC v. FTC. The final rule, with its civil penalty authority, is expected to strengthen deterrence and enforcement actions against deceptive review practices.
The Commission’s unanimous vote to approve the final rule underscores the importance of this regulatory action. The rule will take effect 60 days after its publication in the Federal Register, signaling a new era of accountability for businesses engaging in deceptive review practices.
Overall, the final rule represents a significant milestone in the FTC’s efforts to protect consumers and promote fair competition in the marketplace. With clear prohibitions and enforcement mechanisms in place, the rule is poised to combat fake reviews and testimonials effectively, ensuring transparency and integrity in consumer feedback.
