Tired of fake online reviews? Well, so is the Federal Trade Commission.
On Wednesday, the FTC voted unanimously to ban marketers from using fake reviews and other misleading practices to promote their products and services. The final rule (pdf) will go into effect 60 days after publication in the Federal Register, so mid-October.
To be clear, fake reviews are already illegal and are poor business practices. This rule bolsters those often disparate state rules into a clear, national standard.
What’s a Fake Review?
The FTC rule “prohibits selling or purchasing fake consumer reviews or testimonials, buying positive or negative consumer reviews, certain insiders creating consumer reviews or testimonials without clearly disclosing their relationships, creating a company-controlled review website that falsely purports to provide independent reviews, certain review suppression practices, and selling or purchasing fake indicators of social media influence.”
Reviewer Doesn’t Exist
The first prohibited review is from a reviewer or testimonialist that doesn’t exist.
These are often AI-generated reviews or where a company makes up a user to add more positive reviews on a platform. These reviews would now be banned.
Reviewer Didn’t Use Product or Service
The second prohibited review is where the reviewer hasn’t actually had experience with the product or service.
These happen in a variety of contexts. This category would include those that are paid for reviews but didn’t use the service. But also think about the concerted activity to sink a competitor’s ratings by submitting false reviews on a product or service, or the business as a whole. Or even mass reactions to a political or other newsworthy story.
Reviewer Misrepresents the Product, Service, or Business
The third prohibited review is where the reviewer misrepresents their experience with the product, service, or business.
I’ll admit, upon first reading, it took me a second to figure out what they were prohibiting here or to come up with an example. The wording was just weird. But the best example I could come up with is on Amazon, where they show “Verified Purchaser” of the product next to the review. You would put more credence in that review than others, right?
Well, companies know that. So the companies would have reviewers purchase the product and then reimburse them through other means. The reviewers would then go online and post a 5 star review and rave about the product even when the product was less than desirable. That kind of review is now prohibited.
No Employee or Family Member Reviews
The fourth prohibited review is the employee (including officers, managers, agents, etc) and their family members from posting a review that materially misrepresents the product, service, or business.
Similar to the above prohibited reviews, employees and their family members cannot pose as customers to leave positive reviews that materially misrepresent that they are an actual customer, that they had actual experience with the product, service, or business, or that don’t accurately describe their actual experience with the product, service, or business.
No Buying Positive or Negative Reviews
Companies cannot provide compensation or other incentives for writing reviews that express a particular sentiment.
In other words, companies cannot offer coupons, discounts, or free products if you leave a 5-star review. They can offer them if you leave a review, any review and it doesn’t matter if it is 1, 4, or 5 star review.
No Insider Reviews Without Disclosures
Similar to the prohibition against employee reviews, officers and managers are also prohibited from making consumer reviews or testimonials unless it has a clear and conspicuous disclosure of their relationship to the company.
Officers and managers are also prohibited from soliciting or demanding reviews from employees, agents, and their families without disclosing the material connection to the company in the review.
Companies are also prohibited from disseminating these reviews to others.
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No Disguised Review Websites
Some companies will create what it purports to be an independent review site that is separate from its own websites and company. Of course, they will always rank their own products or services at the top and down vote other competitors. This is now prohibited by the FTC rule on fake reviews.
Prohibited Review Suppression
Another “fake review” tactic is trying to threaten or intimidate people into making fake reviews — either by removing negative reviews or altering negative reviews to be positive reviews.
The rule prohibits anyone from using “unfounded or groundless legal threat, a physical threat, intimidation, or a public false accusation in response to a consumer review … in an attempt to (1) prevent a review or any portion thereof from being written or created, or (2) cause a review or any portion thereof to be removed, whether or not that review or a portion thereof is replaced with other content.”
In addition, companies cannot suppress, or stop, negative reviews from being shown. Some sites may only show the positive reviews, especially on company-owned product sites. This practice would be disallowed.
No Faking Social Media Influence
This rule on fake reviews also prohibits fake social media influence. They use the term “fake indicators of social media influence.”
This could be buying followers, like, re-posts, and comments. All prohibited.
Potential Penalties for Fake Reviews
Caught creating or publishing fake reviews or fake social media influence? The penalty is going to be steep.
The maximum civil penalty for posting (or causing) fake reviews is $51,744 per incident!
Companies Must Earn Their 5-Star Reviews
The bottom line is that with this new rule, companies must earn their five-star reviews by delivering consistent value to their customers. Being authentic and transparent will be key in the new review era.
Maybe once the fake reviews are cleaned up, we can start to trust reviews again.