FTC Bans Fake Online Reviews, Including AI-Generated Testimonials, with Hefty Fines for Violators

Writing a Fake Online Review Can Now Get You Fined More Than $50,000

The rule, unanimously supported by the FEC's commissioners, aims to curb the surge of AI-generated reviews. In a significant move to combat deceptive practices in online marketplaces, the Federal Trade Commission has implemented a ban on the creation, purchase, or sale of fake reviews. The new regulation stipulates hefty fines -- up to $51,744 -- for any individual or entity involved in generating fraudulent online testimonials, including those crafted by artificial intelligence. The rule, unanimously supported by the commissioners, aims to curb the surge of AI-generated reviews, which have recently plagued platforms like Amazon. Furthermore, the ruling targets misleading celebrity endorsements and testimonials posted by a company's employees, relatives, or friends, unless they are accompanied by clear disclaimers. Brands are also prohibited from offering incentives to encourage the dishonest practices. In addition, the rule bans the suppression of negative reviews and insists that businesses refrain from promoting reviews they know, or should reasonably know, to be fake. "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 FTC chairman, Lina Khan, said in a statement. The introduction of the rule marks a pivotal moment in addressing the widespread issue of fake reviews. In a related effort, Google recently updated its review policy, imposing new restrictions on business profiles that violate its guidelines. Businesses found guilty of hosting fake reviews will face sanctions such as temporary suspension of new review submissions and the display of warning messages to users.

A federal ban on fake online reviews is now in effect

The FTC has prohibited the sale or purchase of testimonials, including those generated by AI. Be warned, online merchants who see no issue in publishing phony reviews from made-up customers: that practice is no longer allowed. A federal ban on fake online reviews has taken effect. The Federal Trade Commission issued a final rule on the purchase and sale of online reviews and it came into force 60 days after it was published in the Federal Register. The agency's commissioners voted unanimously in favor of the regulation. The rule bans businesses from creating, buying or selling reviews and testimonials attributed to people who don't exist, including those that are AI generated. False celebrity endorsements aren't allowed and companies can't pay or otherwise incentivize genuine customers to leave positive or negative reviews. Certain reviews and testimonials written by people who have close ties with a company without a disclaimer is a no-no. There are restrictions on soliciting reviews from close relatives of employees too. The rule includes limitations on the suppression of negative reviews from customers. It also prohibits people from knowingly selling or buying fake followers and views to inflate the influence or importance of social media accounts for commercial purposes. Fines for violating these measures . The maximum civil penalty for each infraction is currently $51,744. "Fake reviews not only waste people's time and money, but also pollute the marketplace and divert business away from honest competitors," FTC Chair Lina Khan said when the rule was finalized. "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 rule is a positive move for consumers, with the idea that reviews should be more trustworthy in the future. In a separate victory for consumer rights, the FTC recently to make it as easy for people to cancel a subscription as it is to sign up for one.

New FTC Rule Bans Fake Product Reviews That Mess With Your Shopping

Samantha Kelly is a freelance writer with a focus on consumer technology, AI, social media, Big Tech, emerging trends and how they impact our everyday lives. Her work has been featured on CNN, NBC, NPR, the BBC, Mashable and more. The Federal Trade Commission has introduced a new rule designed to make it harder for you to be misled by fake online reviews. Effective as of Tuesday, the FTC rule prohibits the sale or purchase of fake reviews and allows the FTC to impose civil penalties on violators. It also bans misleading testimonials, such as reviews generated by AI or written by individuals who have no actual experience with the business, its products or its services. In addition, the rule forbids the buying or selling of social media followers for commercial gain. "Fake reviews not only waste people's time and money, but also pollute the marketplace and divert business away from honest competitors," FTC Chair Lina Khan said in an August press release, at the start of a 60-day waiting period before the rules took effect. "By strengthening the FTC's toolkit to fight deceptive advertising, the final rule will protect Americans from being cheated, put businesses that unlawfully game the system on notice, and promote markets that are fair, honest, and competitive." The new rule applies to future reviews. About 90% of consumers rely on reviews when shopping online, according to marketing platform Uberall. Although it's unclear how the FTC will enforce the rule, it could choose to pursue a few high-profile cases to set an example. It can seek fines up to $51,744 per violation. The rule comes at a time when artificial intelligence could worsen the problem, as generative AI tools have the capability to quickly create thousands of fake reviews. The issue also highlights the importance of relying on trusted review sites, such as CNET, which feature human reviewers with hands-on experience and expert insights.

FTC Rule To Protect Consumers From Fake Reviews, AI-Generated Testimonials Comes Into Effect: What You Need To Know

The Federal Trade Commission has enforced a new rule that prohibits the sale or purchase of fake reviews, in a move to maintain the integrity of online reviews and testimonials. The rule, which took effect on Monday, will enable the FTC to impose civil penalties on those who knowingly breach it. What Happened: The FTC's new rule, announced in August, aims to curb the proliferation of fake reviews and testimonials that mislead consumers and unfairly disadvantage honest competitors. The rule specifically targets reviews attributed to non-existent individuals, those generated by artificial intelligence, or those that misrepresent the reviewer's experience. Businesses are also prohibited from creating or selling fake reviews. Those found to be in violation, including businesses that knowingly purchase fake reviews or use intimidation tactics, will face penalties. "As of today, @FTC's final rule banning fake online reviews and testimonials has come into effect," wrote FTC Chair Lina Khan in a post on X. See Also: Tesla Investor Ross Gerber Calls It 'Game Over' As Google's Waymo Expands Robotaxi Presence In West LA Why It Matters: This new rule is part of a series of initiatives led by Khan to ensure fair and transparent business practices. Earlier in September, Khan raised concerns about the potential misuse of AI by airlines to charge higher prices for vulnerable travelers. In October, the FTC also finalized a rule called "click-to-cancel," aimed at simplifying subscription cancellations. The FTC, under Khan's leadership, is also under pressure to block the proposed $16.5 billion acquisition of Catalent Inc by Novo Nordisk A/S due to antitrust concerns. Read Next: Obama Criticizes Trump's Town Hall Appearance At Arizona Rally: 'You Would Be Worried If Your Grandpa Was Acting Like This' Image Via Shutterstock This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote Market News and Data brought to you by Benzinga APIs