New FTC rule targets deceptive reviews, pay-for-play and suppressing negative reviews

Years ago, online reviews were a valuable tool for consumers making buying decisions. With rare exceptions, they have since become little more than promotional effluvia that are little better than advertising.

The Federal Trade Commission is proposing to at least partly drain that swamp with a proposed new rule that would prohibit marketers from using illicit review and endorsement practices such as using fake reviews, suppressing honest negative reviews, and paying for positive reviews, all of which deceive consumers looking for real feedback on a product or service and undercut honest businesses.

“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, in a news release. “The rule would trigger civil penalties for violators and should help level the playing field for honest companies.”

The internet is currently awash in purported "review" sites that are financed at least partly by the companies that are the subject of the reviews. In many cases, companies exert pressure to weed out negative reviews. In others, the supposed review sites list only companies that pay hefty fees to be included.

Even respected newspapers and magazines now routinely extract a fee whenever someone buys a product or service reviewed in their pages.

Many purported reviews are in fact not written by readers of the sites themselves but are instead syndicated by companies, like Bazaarvoice,  that make a business out of collecting, classifying and distributing reviews for a fee.

AI likely to worsen the problem

In its notice of proposed rulemaking, the FTC cited examples of clearly deceptive practices involving consumer reviews and testimonials from its past cases, and noted the widespread emergence of generative artificial intelligence (AI), which is likely to make it easier for bad actors to write fake reviews.

For example, according to the FTC, the proposed rule would prohibit:

• Selling or Obtaining Fake Consumer Reviews and Testimonials: The proposed rule would prohibit businesses from writing or selling consumer reviews or testimonials by someone who does not exist, who did not have experience with the product or service, or who misrepresented their experiences. It also would prohibit businesses from procuring such reviews or disseminating such testimonials if the businesses knew or should have known that they were fake or false.

• Review Hijacking: Businesses would be prohibited from using or repurposing a consumer review written for one product so that it appears to have been written for a substantially different product. The FTC recently brought its first review hijacking enforcement action.

• Buying Positive or Negative Reviews: Businesses would be prohibited from providing compensation or other incentives conditioned on the writing of consumer reviews expressing a particular sentiment, either positive or negative.

• Insider Reviews and Consumer Testimonials: The proposed rule would prohibit a company’s officers and managers from writing reviews or testimonials of its products or services, without clearly disclosing their relationships. It also would prohibit businesses from disseminating testimonials by insiders without clear disclosures of their relationships, and it would prohibit certain solicitations by officers or managers of reviews from company employees or their relatives, depending on whether the businesses knew or should have known of these relationships.

• Company Controlled Review Websites: Businesses would be prohibited from creating or controlling a website that claims to provide independent opinions about a category of products or services that includes its own products or services.

• Illegal Review Suppression: Businesses would be prohibited from using unjustified legal threats, other intimidation, or false accusations to prevent or remove a negative consumer review. The proposed rule also would bar a business from misrepresenting that the reviews on its website represent all reviews submitted when negative reviews have been suppressed.

• Selling Fake Social Media Indicators: Businesses would be prohibited from selling false indicators of social media influence, like fake followers or views. The proposed rule also would bar anyone from buying such indicators to misrepresent their importance for a commercial purpose.

The proposed rule follows an advance notice of proposed rulemaking the Commission announced last November. The FTC received comments from individual consumers, trade associations, review platform operators, small businesses, consumer advocacy organizations, entities dedicated to fighting fake reviews, and academic researchers.