The Federal Trade Commission (FTC) has introduced a new rule aimed at curbing fake reviews and holding businesses accountable for deceptive practices.

Key Provisions of the New Rule

The rule targets review fraud in several significant ways:

• Ban on Fake Reviews: Businesses are prohibited from creating, purchasing, selling, or sharing fake reviews, including those generated by AI.
• No Incentives for Positive Reviews: It is illegal for businesses to pay or offer rewards in exchange for positive reviews.
• Transparency in Connections: Reviewers must disclose any connections to the business they are reviewing, including employment or other affiliations.
• Protection Against Negative Review Suppression: Businesses cannot use legal threats or other intimidation tactics to force the removal of negative reviews.
• No Fake Popularity Metrics: The rule also prohibits buying or selling fake likes, followers, or views on social media platforms.

FTC Chair Lina M. Khan emphasized that these measures are designed to protect consumers and ensure a fair marketplace, stating that fake reviews not only waste consumers’ time and money but also unfairly disadvantage honest competitors.

Background & Development

The development of this rule involved several steps:

• November 2022: The FTC announced its intention to consider a new rule.
• June 2023: A draft of the rule was released for public feedback.
• February 2024: A public meeting was held to discuss the proposed rule.
• August 2024: After considering feedback and making adjustments, the FTC commissioners unanimously approved the final version of the rule.

Implications for Digital Marketers and Businesses

This new regulation requires businesses to:

• Scrutinize Review Practices: Companies must closely monitor how they acquire and manage reviews.
• Beware of Fake AI Reviews: The FTC is aware of the use of AI to generate misleading reviews and will enforce the rule against such practices.
• Disclose Relationships: Anyone promoting products online must clearly state any connections to the companies they endorse.
• Handle Negative Feedback Ethically: Businesses must develop ethical strategies for dealing with negative reviews without resorting to threats or coercion.

Preparing for Compliance

To comply with the new regulations, businesses may need to:

• Audit their current practices for acquiring reviews.
• Implement stricter guidelines for disclosing employee and influencer relationships.
• Focus on enhancing customer experiences to naturally generate positive reviews.
• Develop ethical approaches for managing negative feedback.

What’s Next?

The rule will officially take effect 60 days after its publication, giving businesses about two months to align with these new standards. The FTC’s goal is to enhance the shopping experience and foster consumer trust in the online marketplace.