The Federal Trade Commission announced new regulations to prohibit the use of fraudulent consumer reviews for product promotion. The FTC commissioners unanimously approved the regulations, which will come into effect in October.
The FTC highlighted the increasing ease with which companies can produce fake reviews due to advancements in artificial intelligence.
Initially proposed in 2023, the finalized rules regarding fake reviews were approved over a year later.
Under the new regulations, companies are forbidden from creating or selling consumer reviews attributed to non-existent individuals or individuals without genuine product or service experience. Additionally, businesses are prohibited from repurposing a review for a different product to make it appear as if it was intended for that product.
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Companies are not allowed to offer incentives for positive reviews.
Furthermore, businesses are restricted from sharing testimonials from employees or their relatives without disclosing their affiliation with the company. The regulations also address the sale and purchase of fake social media influence indicators.
FTC Chair Lina M. Khan commented, “Fake reviews not only waste people’s time and money, but also pollute the marketplace and divert business away from honest competitors. By enhancing the FTC’s tools to combat deceptive advertising, the final rule aims to protect consumers, hold businesses engaging in deceptive practices accountable, and foster fair and competitive markets.”
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The FTC has previously taken legal action against companies for using misleading reviews to boost sales.
Some companies have implemented measures to combat fake reviews, with Amazon stating, “Amazon is aggressively combating fake reviews through a combination of machine-learning models and expert investigators to ensure the authenticity of every review on our platform. Through proactive technology and legal action, Amazon blocked over 250 million suspected fake reviews in 2023, aiming to eliminate fake review brokers entirely.”
