The Federal Trade Commission (FTC) has issued a final rule prohibiting fake consumer reviews and testimonials. This rule allows the FTC to seek civil penalties against violators who knowingly break the rule. The rule will become effective 60 days after its publication in the Federal Register.
What’s in the rule on Fake Consumer Reviews?
- The rule specifically prohibits the creation, sale, or use of fake consumer reviews, testimonials, and celebrity endorsements. Note that this includes AI-generated fake reviews.
- It prohibits businesses from misrepresenting that a reviewer exists, has used the product, or has had the experience described in the review.
- Businesses are forbidden from offering compensation or incentives for reviews that express a particular sentiment, whether positive or negative.
- Officers or managers of a business must disclose their relationship to the business when writing reviews or testimonials. If a review is being posted by an employee or any immediate relative, such relationships must be clearly disclosed.
- Businesses cannot misrepresent that a website they control provides independent reviews.
- Any threats or intimidation to prevent or remove negative reviews is prohibited.
- Businesses cannot misrepresent that the reviews on their site represent all submitted reviews if they have suppressed negative ones.
- The sale or purchase of fake social media indicators, such as followers or views, when the buyer knew or should have known they were fake, strictly prohibited.
Violations can result in civil penalties, with fines up to $51,744 per violation. Each fake review or testimonial could be considered a separate violation.
Reliable consumer reviews have been a valuable tool to create trust in the marketplace. They are designed to provide customers with unbiased insights into the quality and performance of products and services, which can significantly influence purchasing decisions. For companies looking to leverage consumer reviews as a marketing tool, it is essential to encourage honest reviews from a diverse customer base. Responding to reviews, both positive and negative, in a constructive and transparent manner can further enhance credibility.
What can you do to ensure compliance with the FTC Rule?
- No Bots. First, make sure actual customers (and not bots) leave reviews. Authenticity builds trust.
- Respond to reviews, both positive and negative. This shows that you value customer feedback and are committed to improving your products or services.
- Verified Reviews. Use platforms that verify the authenticity of reviews. Verified reviews carry more weight and credibility.
- Monitor Feedback. Regularly monitor reviews to identify trends and areas for improvement and use feedback to enhance your offerings and customer experience.
- Don’t Manipulate Reviews. Don’t engage in practices like buying reviews or suppressing negative feedback.
Why This Matters
Consumer reviews are a widely used and very effective marketing tool. When consumer feedback is genuine and authentic, it can go a long way to building trust between brands and consumers. When feedback is fake, it can have the opposite effect. Consult with an attorney to ensure that your company understands the parameters of reviews, when and how to post them, and having consistent internal policies.