The Federal Trade Commission on August 14 announced a final trade regulation rule intended to fight fake reviews and testimonials by prohibiting their purchase or sale and by allowing the agency to seek civil penalties against violators.
The final rule, 16 CFR Part 465: Trade Regulation on the Use of Consumer Reviews and Testimonials, follows a proposed rule issued in June 2023 and an informal hearing on the proposal that was held in February.
Specifically, the final rule prohibits:
- False consumer reviews, testimonials and celebrity testimonials. Businesses are prohibited from creating or selling such testimonials. The rule also prohibits companies from buying or disseminating such endorsements when the business knew, or should have known that they were fake.
- Purchasing positive or negative reviews. The final rule prohibits businesses from providing compensation or other incentives for the writing of positive or negative reviews.
- Insider reviews and consumer testimonials. The final rule prohibits reviews that fail to disclose a reviewer’s connection to a business.
- Company-controlled review websites. The final rule prohibits a business from claiming that a website it controls offers independent reviews or opinions about a category of products or services that includes its own products or services.
- Review suppression. The final rule prohibits a business from making groundless legal threats or using other intimidation to prevent negative reviews.
- Misuse of fake social media indicators. The final rule prohibits businesses from selling or purchasing fake indicators of social media influence, such as followers or reviews generated by a bot. The prohibition is limited to situations in which the buyer knew or should have known that the indicators were fake and misrepresent the buyer’s influence or importance.
The FTC approved the final rule on a 5-0 vote. The rule will become effective 60 days after publication in the Federal Register. For additional discussion of the rule and steps companies can take to protect themselves from legal risk when using reviews and testimonials, a podcast with special guest Michael Ostheimer, Senior Consumer Protection Attorney in the FTC’s Division of Advertising Practices, is available here.