FTC Proposes Rule to Crack Down on Fake Reviews and Deceptive Marketing Tactics As much as 30-40% of online reviews are fake, according to a new report.
Key Takeaways
- The FTC proposed a new rule that targets fake reviews, the suppression of negative feedback, and paid endorsements.
- The proposed rule aims to protect consumers seeking genuine feedback and support honest businesses.
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The Federal Trade Commission has proposed a new rule that would penalize businesses for using deceptive marketing tactics such as generating fake reviews, hiding honest negative reviews, and paying for positive reviews — all of which deceive consumers and damage honest businesses, the agency said on Friday.
In the notice of proposed rulemaking, the FTC also noted the widespread adoption of generative AI and its subsequent potential to make it easier for bad actors to generate fake reviews.
"Our proposed rule on fake reviews shows that we're using all available means to attack deceptive advertising in the digital age," said Samuel Levine, director of the FTC's Bureau of Consumer Protection, in a statement. "The rule would trigger civil penalties for violators and should help level the playing field for honest companies."
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The proposed rule would prohibit and penalize a range of "clearly deceptive practices," including the sale or acquisition of fake consumer reviews and testimonials, purchasing positive or negative reviews, company-controlled review websites, suppression of negative reviews, and buying fake followers or views to "misrepresent importance" for commercial gain.
The rule aims to filter out false and misleading testimonials that give some businesses an unfair advantage, as the positive reviews may attract consumers but not actually reflect the customer base or level of satisfaction.
According to Public Interest Research Group, as much as 30-40% of online reviews are fake, per The Washington Post. Under the proposed rule, those fake reviews would not only be banned but also carry a potentially hefty fine.
"Although the FTC has taken strong enforcement action in this area recently, case-by-case enforcement without civil penalty authority might not be enough to deter clearly deceptive review and testimonial practices," the agency said in the release.
The FTC is accepting public comments on the proposed rule for 60 days, after which it will review and then issue a final ruling.
Related: The FTC Is Suing Amazon For Allegedly Signing Up Customers For Prime Without Their Consent
