The U.S. Federal Trade Commission (FTC) announced on Wednesday a final rule that will tackle several types of fake reviews and prohibit marketers from using deceptive practices, such as AI-generated reviews, censoring honest negative reviews, and compensating third parties for positive reviews.
The decision was the result of a 5-to-0 vote. The new rule will start being enforced 60 days after it’s published in the official government publication called Federal Register.
The FTC’s new rule has been a long time coming. It aims to improve the often untrustworthy online review system and — hopefully — make it easier for people to find reliable reviews. Merchants, especially on Amazon, have been using fake and paid reviews for far too long. Amazon claimed to cease more than 200 million fake reviews in 2020. In 2021, Yelp reported over 950 people were engaging in “deceptive review practices” on the site. Now, the rise of generative AI has made it easier than ever for bad actors to write fake reviews.
The FTC initially proposed the rule on June 30, 2023, following an advanced notice of proposed rulemaking issued in November 2022.
You can read the finalized rule here, but we also included a summary of it below:
- No fake or disingenuous reviews. This includes AI-generated reviews and reviews from anyone who doesn’t have experience with the actual product.
- Businesses can’t sell or buy reviews, whether negative or positive.
- Company insiders writing reviews need to clearly disclose their connection to the business. Officers or managers are prohibited from giving testimonials and can’t ask employees to solicit reviews from relatives.
- Company-controlled review websites that claim to be independent aren’t allowed.
- No using legal threats, physical threats, or intimidation to forcefully delete or prevent negative reviews. Businesses also can’t misrepresent that the review portion of their website comprises all or most of the reviews when it’s suppressing the negative ones.
- No selling or buying fake engagement like social media followers, likes, or views obtained through bots or hacked accounts.
According to the final rule, the maximum civil penalty for fake reviews is $51,744 per violation. However, the courts could impose lower penalties depending on the specific case.
“Ultimately, courts will also decide how to calculate the number of violations in a given case,” the Commission wrote.
