The Federal Trade Commission (FTC) has introduced a new rule aimed at curbing illicit reviews. These deceptive practices include using fake reviews, suppressing honest negative reviews, and paying for positive reviews. While we know these tactics mislead consumers seeking genuine feedback on products, honest brands should be celebrating this initiative to create a fair opportunity in the marketplace.
“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. “The rule would trigger civil penalties for violators and should help level the playing field for honest companies.”
Why is the FTC banning fake reviews?
One trigger for this new proposed rule is the rise of AI. Generating fake reviews has never been easier with access to AI platforms and plugins. The FTC has always prohibited deceptive advertising, but as AI technology grows and becomes integrated into every touchpoint of our lives, it’s their responsibility to ensure consumer safety. AI is a powerful tool and shouldn’t be used for malicious intent, including manipulating consumers.
The FTC's notice cites past cases involving clearly deceptive practices related to consumer reviews and testimonials. In a previous case where the FTC put over 700 businesses on notice regarding their fake review practices, Levine warned, “Advertisers will pay a price if they engage in these deceptive practices.”
What’s prohibited under the new FTC rule?
Here’s an overview of the rule changes that will help the FTC ban fake reviews.
1. Selling or obtaining fake consumer reviews and testimonials
Businesses would be prohibited from writing or selling reviews or testimonials by nonexistent individuals or those without relevant experiences. Similarly, businesses cannot procure or disseminate fake reviews if they knew or should have known their falsity.
2. Review hijacking
Companies cannot repurpose consumer reviews written for one product to make them appear as if they were written for a substantially different product.
3. Buying positive or negative reviews
Companies cannot pay a reviewer on the condition they provide a certain sentiment in their review, whether positive or negative.
4. Insider reviews and consumer testimonials
Companies' officers and managers cannot write reviews or testimonials without disclosing their relationships. Businesses are also prohibited from sharing testimonials by insiders without clear disclosures. Certain solicitations by officers or managers for reviews from company employees or their relatives would be barred, depending on the businesses' knowledge of these relationships.
5. Company-controlled review websites
Establishing or controlling a website that claims to provide independent opinions about a category of products or services that includes the company's own offerings would be prohibited.
6. Illegal review suppression
Using unjustified legal threats, intimidation, or false accusations to prevent or remove negative consumer reviews would be prohibited. Businesses cannot misrepresent that the reviews on their website represent all submissions when negative reviews have been suppressed.
7. Selling fake social media indicators
Selling false indicators of social media influence, such as fake followers or views, would be prohibited. Likewise, purchasing such indicators to misrepresent their significance for commercial purposes would be barred.
The commission received feedback from multiple stakeholders, including individual consumers, trade associations, review platform operators, small businesses, consumer advocacy organizations, entities dedicated to combating fake reviews, and academic researchers.
While the FTC has recently taken enforcement actions in this area, the lack of civil penalty authority following the Supreme Court's decision in AMG Capital Management LLC v. FTC has limited the commission's ability to seek monetary relief for consumers under the FTC Act.
The proposed rule addresses this issue by defining prohibited practices and enabling civil penalties, which strengthens deterrence and FTC enforcement actions.
The best review: a consumer perception study
Want an honest review of your product that can also serve as scientific evidence for product claims? Consider enrolling in a consumer perception study. Similar to a clinical study, a consumer perception study tests your product with a group of qualified study participants. You select the criteria, send us your product, and we take care of the rest.
Consumers have caught on to fake reviews and are now looking for sources of evidence that aren’t sponsored or skewed. While the FTC works to level the playing field and gain consumer trust again with reviews, scientific research will always be the most credible source of feedback.
It’s important to note that results from a consumer perception study count as scientific evidence and best practice indicates that you should cite your source. Just like the FTC requires you to disclose the relationship between the business and the reviewer (consumer, employee, contractor, etc.), an authentic brand always indicates how and where they received their research data. For more tips on how to cite your source and build credibility with your audience, read this article by Citruslabs CEO Susanne Mitschke.
Resources to stay compliant
Check out these resources to help your brand stay compliant in the ever-changing landscape of compliance and competition in the wellness industry. At Citruslabs, we’re always here to answer your questions, so don’t hesitate to reach out.