The Federal Trade Commission (FTC) is taking action to prohibit “deceptive advertising.” On Wednesday, the organization announced that fake reviews, purchased followers, and suppression of reviews will be prohibited, and open to civic penalties.
The new rule — which was voted in favor of 5-0 — will disallow fake reviews and false reviews from folks with no experience with a business, and will prohibit businesses from selling reviews and companies from buying them.
“Fake reviews not only waste people’s time and money but also pollute the marketplace and divert business away from honest competitors,” said FTC Chair Lina Khan in a press release.
The new ruling will prohibit companies from paying or incentivizing positive or negative consumer reviews, and from “buying fake indicators of social media influence,” including false followers or views generated by bots.
“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,” added Khan.
Also included in the ruling is the prohibition of businesses from suppressing reviews, and will not allow workers at a company to either issue their own reviews or encourage immediate relatives of employees from posting positive reviews.
The proposed rule was announced in June 2023 and the FTC held an informal hearing on the ruling in February 2024. The new rule will become effective in 60 days following its officialization on Aug. 14.
“Case-by-case enforcement without civil penalty authority might not be enough to deter clearly deceptive review and testimonial practices,” read the FTC’s release, pointing to a Supreme Court decision that “hindered the FTC’s ability to seek monetary relief for consumers.”
“This rule will enhance deterrence and strengthen FTC enforcement actions,” the release added.
