Fake reviews: New FTC rules carry stiff fines, should help consumers find truthful information
Nearly three years after the Federal Trade Commission warned companies about condoning fake reviews, it got real. The FTC has announced new final rules aimed at reducing the volume of illegitimate reviews for products and services that pollute the online marketplace. The consequences for getting caught could include steep civil penalties.
By a 5-0 vote, the Commission approved the rules which prohibit:
- Sanctioning reviews or testimonials that aren’t legitimate or were written by someone who doesn’t exist;
- Buying positive or negative reviews,
- Allowing reviews from relatives or company insiders.
- Suppressing negative reviews.
- Misrepresenting popularity on social media through followers or views generated by a bot.
- Misrepresenting that a website with reviews or something else that suggests credibility is independent when it was actually created or is controlled by the company.
“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. “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 Commission has been considering new regulations on fake reviews for years. The rules will take effect Oct. 21, 2024.
In a statement, Teresa Murray, Consumer Watchdog Director at U.S. PIRG Education Fund said:
“This is another win for consumers and for honest businesses. Fake or deceptive reviews in various forms have become a huge problem in recent years, especially when so many consumers moved to online shopping at the start of the pandemic. Research has found that 90% of online shoppers base at least some of their decisions about what to buy on reviews they find online.
“But when bad actors concoct reviews, bribe someone to write glowing reviews, fabricate negative reviews about competitors or squash genuinely negative reviews, it hurts consumers as well as businesses that are operating truthfully. It’s difficult for ethical companies to compete against lies. Research shows 30 to 40% of reviews are dishonest in some way. We hope this new rule starts to change that.”
See our consumer guide: How to recognize fake online reviews
Read the comments U.S. PIRG Education Fund submitted to the FTC
in 2023 about the need for a safer online marketplace.