FTC Final Rule on Fake Reviews and Testimonials Now in Effect

On August 14, 2024, the US Federal Trade Commission (FTC) approved a final rule (Final Rule) regulating the use of consumer reviews and testimonials. The Final Rule broadly bans the use of fake and artificial intelligence-generated reviews and testimonials and fake social media indicators, and also regulates the purchase of such reviews and testimonials and the suppression of reviews. The Final Rule took effect on October 21, 2024, and applies broadly to all businesses entities that sell products or services.

What Does The Final Rule Cover?
Fake consumer reviews, consumer testimonials, and celebrity testimonials. The Final Rule bans businesses from creating different types of reviews and testimonials (such as those that are AI-generated) which materially misrepresent that the reviewer exists or used the product, or the reviewer’s experience with the product. Businesses are also prohibited from purchasing or disseminating such content.

Buying positive or negative consumer reviews. The Final Rule prohibits a business from providing compensation or other incentives for a consumer review expressing a particular point of view.

Insider consumer reviews and testimonials. The Final Rule requires businesses to disclose any relationship it may have to the reviewer when publishing a consumer review or testimonial. These restrictions do not apply to generalized solicitations to purchasers to post testimonials or merely engaging in consumer review hosting.

Company-controlled review websites or entities. The Final Rule prohibits a business from materially misrepresenting that a website, entity, or organization it controls provides independent reviews or opinions, other than consumer reviews, about products or services which such business offers.

Review suppression. The Final Rule forbids a business from suppressing reviews, such as by utilizing an unfounded legal threat or public false accusation, in an attempt to prevent reviews from being written or cause reviews to be removed. Furthermore, businesses may not represent that the displayed reviews represent most or all reviews when other reviews are being hidden based upon their rating. However, there are some important exceptions to this review suppression ban, such as where a business is seeking to protect its legitimate interests (for instance, withholding a review because it contains trade secrets or obscene or false language).

Misuse of fake indicators of social media influence. Lastly, the Final Rule prohibits businesses from utilizing fake indicators of social media influence which it knows or should have known to be fake, and which materially misrepresents its influence or importance. Essentially, a business is not allowed to manipulate social media influence metrics to make itself appear more popular for commercial gain.

What’s Next For Businesses?
Businesses should exercise an appropriate degree of caution when working with consumer reviews and testimonials to avoid noncompliance with the Final Rule. The FTC may seek civil penalties of up to $51,744 per violation.

The attorneys at Dvorak Law Group, LLC are ready to discuss the facts and circumstances surrounding your business in relation to complying with the Final Rule, in addition to analyzing other legal matters that may impact your business.