The following is an announcement from the (U.S.) Federal Trade Commission:
The FTC has issued a new rule striking against the persistent problem of fake and false consumer reviews and testimonials. Consumers should be able to trust the authenticity of feedback they read, hear, or see about a product or service. But digital content — including reviews and testimonials — has always been easy to fake, and with generative AI tools it’s now even easier. That makes our new rule even more significant.
Fake reviews and testimonials have polluted the marketplace. They harm the many consumers relying on them to pick products and providers, subverting people’s ability to make informed decisions. They also hurt competitors who work hard to comply with the law.
The FTC has challenged illegal practices regarding reviews and testimonials for several decades. Along with numerous law enforcement actions, we’ve also issued guidance to help businesses do the right thing. We’re not alone. Other regulators in the states and abroad have been trying hard to attack the problem. And whether protected from liability or not, online marketplaces and social media companies also have a crucial role to play, and they could and should do more to stem the tide of deceptive commercial conduct that they’ve allowed to fester on their platforms.
But altogether it has not been enough. That’s why, in 2022, we started the process for developing a new federal rule spelling out clearly deceptive practices in this area, authorizing courts to impose civil penalties for knowing violations, strengthening our enforcement actions, and imposing a deterrent effect on bad actors. The final Rule on the Use of Consumer Reviews and Testimonials reflects the great benefits of the public comment process. We heard a broad range of perspectives from consumers, small businesses, advocacy organizations, trade associations, review platform operators, researchers, and others with an interest in the area. As a result of their comments, we’ve made some clarifications and adjustments to the initially proposed version of the rule, which you can read all about in the lengthy statement accompanying the new rule.
Just as originally intended, the new rule remains focused on fighting clearly deceptive practices involving reviews and testimonials and not burdening honest businesses. Any deceptive or unfair practice involving reviews or testimonials which the rule does not cover is still subject to the FTC Act. The rule prohibits the following practices:
Writing, selling, or buying fake or false consumer reviews. The rule prohibits businesses from writing or selling consumer reviews that misrepresent they are by someone who doesn’t exist or who didn’t have actual experience with the business or its products or services, or that misrepresent the reviewers’ experience. It also prohibits businesses from buying consumer reviews that they knew or should have known made such a misrepresentation. Businesses are also prohibited from procuring from certain company insiders such reviews about the business or its products or services for posting on third-party sites, when the businesses knew or should have known about the misrepresentation. (The prohibitions on buying or procuring reviews don’t cover generalized review solicitations to past customers or simply hosting reviews on the business’s website. Neither will a retailer or other entity be liable for sharing consumer reviews unless it would have been liable for displaying those same reviews on its own website.)
Writing, selling, or disseminating fake or false testimonials. Businesses are similarly prohibited from writing or selling consumer or celebrity testimonials that make the same kinds of misrepresentations. They’re also prohibited from disseminating or causing the dissemination of such testimonials when they knew or should have known about the misrepresentation. (The prohibition on disseminating testimonials doesn’t cover the type of generalized solicitations to past customers discussed above with respect to reviews.)
Buying positive or negative reviews. Businesses are prohibited from providing compensation or other incentives contingent on the writing of consumer reviews expressing a particular sentiment, either positive or negative. Violations here include situations in which such a contingency is express or implied. So, for example, while it prohibits offering $25 for a 5-star review, it also prohibits offering $25 for a review “telling everyone how much you love our product.”
Failing to make disclosures about insider reviews and testimonials. The rule prohibits a company’s officers and managers from writing reviews or testimonials about the business or its products or services without clearly disclosing their relationship. Businesses are also prohibited from disseminating testimonials by company insiders without clear disclosures, if the businesses knew or should have known of the relationship. A similar prohibition exists for officer or manager solicitations of reviews from their immediate relatives or from employees or agents of the business, and when officers or managers ask employees or agents to seek such reviews from relatives. For these various solicitations, the rule is violated only if (1) the officers or managers didn’t give instructions about making clear disclosures, (2) the resulting reviews – either by the employees, agents, or the immediate relatives of the officers, managers, employees, or agents – appear without clear disclosures, and (3) the officers or managers knew or should have known that such reviews appeared and failed to take steps to have those reviews either removed or amended to include clear disclosures. All of these prohibitions hinge on the undisclosed relationship being material to consumers. (These disclosure provisions also clarify that they don’t cover mere review hosting or generalized solicitations to past customers.)
Deceptively claiming that company-controlled review websites are independent. Businesses are prohibited from misrepresenting that websites or entities they control or operate are providing independent reviews or opinions, other than consumer reviews, about a category of businesses, products, or services that includes their own business, product, or service.
Illegally suppressing negative reviews. The rule prohibits using unfounded or groundless legal threats, physical threats, intimidation, or public false accusations (when the accusation is made with knowledge that it’s false or with reckless disregard as to its truth or falsity) to prevent the posting or cause the removal of all or part of a consumer review. Legal threats are “unfounded or groundless” if they’re unwarranted by existing law or based on allegations that have no evidentiary support. Also, if reviews on a marketer’s website have been suppressed based on their rating or negative sentiment, the rule prohibits that business from misrepresenting that the reviews on a portion of its website dedicated to receiving and displaying such reviews represent most or all submitted reviews.
Selling and buying fake social media indicators. The rule prohibits the sale or distribution of fake indicators of social media influence, like fake followers or views. A “fake” indicator means one generated by a bot, a hijacked account, or that otherwise does not reflect a real individual’s or entity’s activities or opinions. The rule also bars anyone from buying or procuring such fake indicators. These prohibitions are limited to situations in which the violator knew or should have known that the indicators were fake and which involved misrepresentations of a person’s or company’s influence or importance for a commercial purpose.
We mentioned generative AI earlier, and you may be thinking, to paraphrase Tina Turner, what’s AI got to do with it? The rule doesn’t specifically refer to AI, so do these prohibitions cover situations when someone uses an AI tool to generate the deceptive content at issue? Of course they do. To paraphrase ourselves, there’s no AI defense to the regulations on the books.