FTC proposes rule to ban fake reviews and similar shady practices plaguing consumers

The Federal Trade Commission announced a proposed rule Friday meant to crack down on fake reviews notorious for deceiving consumers looking for honest feedback on products and services.

"Our proposed rule on fake reviews shows that we’re using all available means to attack deceptive advertising in the digital age," said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection.

"The rule would trigger civil penalties for violators and should help level the playing field for honest companies."

The bogus review issue takes several forms, but each share a common element — separating hard-working consumers from their money.

The problem will only deepen as generative AI makes creating scores of fake reviews quick, cheap, and easy, the agency said in a press release.

Shady marketers artificially pump up review counts in a number of ways, the FTC explained in the release.

Buying and selling fake consumer reviews and testimonials is the most obvious deceptive practice. The proposed rule would prohibit the practice on both ends of the transaction. Writing and selling fake consumer reviews would be prohibited, and procuring and disseminating them would be prohibited, as well.

A lesser known practice called "review hijacking" would also be jettisoned by the proposed rule. Review hijacking involves stealing or repurposing reviews of another product. The FTC fined The Bountiful Company $600,000 in its first review hijacking case last February.

In the case of The Bountiful Company, review hijacking was achieved by manipulating an Amazon feature that allows vendors to create a "variation" relationship among products.

The FTC's proposed rule would also prohibit a company's officers and managers from writing reviews and testimonials for its own products unless they clearly disclose the relationship.

Using legal threats or other intimidation to suppress negative reviews would be prohibited under the rule. Similarly, businesses would be barred from holding back negative reviews on their website if they claim to show all submitted reviews.

"Although the FTC has taken strong enforcement action in this area recently, case-by-case enforcement without civil penalty authority might not be enough to deter clearly deceptive review and testimonial practices," the FTC said in its release.

The agency cited the Supreme Court's decision in AMG Capital Management LLC v. FTC, saying that their ability to seek monetary relief for consumers had been hindered under the FTC Act.

"A rule clearly spelling out prohibited practices and allowing for the judicial imposition of civil penalties could strengthen deterrence and FTC enforcement actions."

Once the FTC's proposed rule is published in the Federal Register, a 60-day public comment period will commence.

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