FTC Finalizes Rule to Combat Fake Reviews and Deceptive Social Media Practices

FTC Finalizes Rule Banning Fake Reviews That 'Pollute' Marketplace

FTC Chair Lina Khan said fake reviews are a waste of people's time The Federal Trade Commission on Wednesday announced that it has finalized a rule that bans marketers from using fake reviews and other practices that mislead consumers about products and services offered. Businesses are prohibited from selling or purchasing fake consumer reviews or testimonials, the final rule states. Marketers are also banned from buying both positive and negative reviews, and they are prohibited from "creating a company-controlled review website that falsely purports to provide independent reviews." Among several other banned practices, the FTC's final rule states that businesses cannot make use of "certain insiders" to create consumer reviews or testimonials without disclosing their relationships clearly. Regarding negative reviews on products that consumers may find defective or ineffective, marketers are also banned from engaging in "suppression practices" to manipulate negative comments from real consumers. The rule puts the influencer industry in the spotlight as it also bars businesses from using fake celebrity testimonials, citing an "in-depth Better Business Bureau investigative study that examined fake celebrity endorsements." The FTC also cited an FTC consumer alert regarding fake Shark Tank celebrity testimonials. Notably, the FTC prohibits the use of "generative artificial intelligence (AI) tools" to come up with product or service reviews. The rule further reiterates that fines may be issued for each violation, meaning e-commerce websites with thousands of reviews can easily see penalties add up if their reviews are determined to have violated the rule. The rule will take effect 60 days after its publication in the Federal Register. "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 M. Khan said in a statement. "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," she added.

FTC cracks down on fake reviews and influencer misconduct with new rule - SiliconANGLE

FTC cracks down on fake reviews and influencer misconduct with new rule The U.S. Federal Trade Commission today announced a final rule that will ban marketers from using fake reviews, including those generated with artificial intelligence and other deceptive marketing methods such as paying for bots to inflate follower counts. The rule allows the FTC to strengthen enforcement and seek civil penalties against violators. "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 M. Khan said in a statement. "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 rule covers six aspects of contrived and fake marketing, starting with banning fake or false consumer rules, consumer testimonials and celebrity testimonials. The rule prohibits reviews and testimonials from someone who does not exist, such as AI-generated fake reviews and reviews from people who have no experience with or misrepresent products. Businesses are also prohibited from buying such reviews, procuring them, or disseminating them where the business knows the reviews are fake or false. Buying positive or negative reviews is also now prohibited, with businesses no longer able to provide compensation or other incentives conditioned on the writing of consumer reviews expressing a particular sentiment, either positive or negative. While the FTC doesn't provide examples, the potential reach of the rule could particularly affect online influencers. Insider reviews written by company insiders that fail to clearly and conspicuously disclose the giver's material connection to the business are also now banned. Officers or managers are also limited in being able to solicit reviews from employees or relatives. Businesses are also now prohibited from creating reviews or opinion sites that are presented as being independent review sites from providing reviews or opinions about their own products. The tactic is fairly common among tech companies; for example, a search for online video editing software often results in companies presenting so-called reviews of products that put their own products top and center. On the social media side, under the final rule, anyone - not just companies - will be prohibited from selling or buying fake indicators of social media influence, such as followers or views generated by a bot or hijacked account. There's a whole industry around buying fake followers and views, which will be heavily impacted by the prohibition, along with countless influencers and celebrities who use such services to present their accounts as being more popular than they actually are. Last but not least and arguably the most serious in terms of legal implications, is that review suppression is now prohibited. Businesses are now prohibited from using unfounded or groundless legal threats, physical threats, intimidation, or certain false public accusations to prevent or remove a negative consumer review. The rule also bars businesses from misrepresenting that reviews on a review portion of their website represent all or most reviews when negative reviews have been suppressed. The FTC voted unanimously 5-0 to adopt the final rule, which will become effective 60 days after the date it's published in the Federal Register. Presuming that it's published soon, the rule should go into affect mid to late October.

FTC bans fake online reviews, inflated social media influence; rule takes effect in October

The Federal Trade Commission on Wednesday voted unanimously to ban marketers from using fake reviews, like those generated with AI technology, and other misleading practices to promote their products and services. All five FTC commissioners voted to adopt the final rule, which will go into effect 60 days after it is published in the Federal Register, the government's official catalog of rules and notices. Typically, rules are published within days of their adoption, meaning that consumers can expect to see the FTC's fake review ban go into effect starting in mid-October. "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 a statement. Along with prohibiting reviews written by non-humans, the FTC's rule also forbids companies from paying for either positive or negative reviews to falsely boost or denigrate a product. It also forbids marketers from exaggerating their own influence by, for example, paying for bots to inflate their follower count. Violations of the rule could result in fines being issued for each violation, according to the rule. This means that for an e-commerce site with hundreds of thousands of reviews, penalties for fake or manipulated ones could quickly add up. With the rise of e-commerce, influencer marketing and generative AI, more advertisers are turning to automated chatbots like ChatGPT to quickly generate user reviews for products sold on online platforms. The result: Consumers sometimes end up purchasing items based on false praise or misleading promises. Fake reviews are already illegal, and some e-commerce companies have tried to push back on the deceptive marketing practice themselves. Amazon, for example, sued over 10,000 Facebook group administrators in July 2022 for brokering fake reviews. Amazon did not immediately respond to a request for comment on the FTC's new rule from CNBC. Under the FTC's new rule, companies that might have policed themselves in the past will now be subject to stricter government oversight. Rather than prosecuting individual cases through the Department of Justice, this rule will streamline and strengthen the FTC's ability to enforce the ban in house. The announcement came the same day as the White House's first "Creator Economy Conference," during which Biden administration officials hosted 100 online influencers and digital content professionals to listen to concerns about the industry.

FTC bans fake online reviews, testimonials

The Federal Trade Commission (FTC) announced on Wednesday a final rule that bans online fake reviews and testimonials and allows the agency to seek civil penalties from known violators. The rule seeks to curb the volume of reviews generated by artificial intelligence or written by someone who misrepresents their experience with the product or service in exchange for compensation. It also targets the practice of inconspicuously suppressing negative reviews. "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 a news release. "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," she added. The agency proposed the rule in June 2023 and held an informal hearing in February 2024. Since then, the agency has incorporated public comments into the provisions of the final rule released on Wednesday. The final rule prohibits businesses from creating, selling or buying reviews that do not disclose that they were generated by artificial intelligence or that do not disclose that they were written by someone who has never actually used the product or falsely purports to have a positive experience. Businesses may not compel company insiders to write these reviews, nor can they disseminate them when they "knew or should have known that the reviews or testimonials were fake or false." The final rule prohibits businesses from offering users any kind of incentive, including compensation, to write reviews that express a particular sentiment - positive or negative. The new final rule also specifies that the "conditional nature" of the compensation could be "expressly or implicitly conveyed." The new rule prohibits reviews from officers or managers that do not make clear the connection to the business. Similarly, officers and managers face certain disclosure requirements when soliciting reviews from relatives. The final rule prohibits businesses from making up false reasons to suppress negative reviews. It also bars anyone from "selling or buying fake indicators of social media influence, such as followers or views generated by a bot or hijacked account." This provision has been updated to specify that it's limited to situation in which the buyer "knew or should have known" that the indicators were fake.

FTC is cracking down on fake reviews and social media engagement (NASDAQ:AMZN)

Ever get the feeling that 5-star review is not all that real? Sounds auto-generated or too similar to the rest of them? Well, the Federal Trade Commission has taken notice too, as consumer complaints pile up in the age of generative AI and e-commerce popularity. New rules are set to combat fake reviews and testimonials, while the agency will be allowed to seek civil penalties against knowing offenders. Quote: "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 declared. "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." Besides bans on false reviews and testimonials, prohibitions will be applied to the censorship of negative reviews or compensating third parties for positive feedback. The rules also target deceptive practices surrounding AI-generated reviews or offering incentives to customers in exchange for writing specific comments. Buying or selling fake engagement such as likes, followers, or views on social media will be outlawed as well, and clarity about business connections or ties will be required if engaging in the review of a product.

Writing Fake Online Reviews? The FTC Can Now Come After Your Money

Late last year, Tom Hanks was surprised to learn he was the newest spokesman for a dental plan. Turns out his rave review was an AI deepfake, and he had nothing to do with it. It's the type of promotional trickery the FTC is now going after in the US. The FTC today finalized rules intended to crack down on fake online reviews. They ban companies from buying or selling positive or negative reviews or having employees write reviews pretending to customers. The rules also cover those who use threats to suppress bad reviews or hijack social media accounts to promote products. Companies are also banned from setting up websites that claim to include independent reviews but are actually just intended to publish glowing reviews of their own products. "Fake reviews not only waste people's time and money, but also pollute the marketplace and divert business away from honest competitors," said FTC Chair Lina M. Khan. "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 rules allow the FTC to seek civil penalties for violations. Currently, the maximum civil penalty is $51,744 per violation, although courts can lower that amount based on severity and business size. The FTC says that "ultimately, courts will also decide how much to calculate the number of violations in a given case." Without the threat of civil penalties, there "might not be enough to deter clearly deceptive review and testimonial practices," the FTC says.