On August 14, the FTC announced a final rule addressing fake reviews and testimonials, prohibiting businesses from generating misleading reviews of their products or services. The final rule addresses concerns raised by the Commission of unfair or deceptive practices involving consumer reviews and testimonials, which the Commission asserts wastes consumers’ time and drives business from honest competitors.
The rule prohibits several specific practices, including: (i) the creation, sale, or purchase of fake reviews; (ii) reviews written by company insiders without proper disclosure of insider status; (iii) misleading representations that a website or entity controlled by a company provides independent reviews of products or services offered by the same company; and (iv) the use of fake indicators of social media influence, such as inflated views generated by fake social media accounts. The final rule also prohibits business from using threats to suppress negative reviews from consumers, and the final rule bars a business from misrepresenting either negative or all reviews on its website.
The FTC noted that the final rule will be necessary to allow it to obtain consumer redress for violations of the rule, following the Supreme Court’s decision in AMG Capital Management, LLC v. FTC, limiting the commission’s ability to obtain monetary relief (covered by InfoBytes here).
The rule will take effect 60 days after its publication in the Federal Register.
