The Federal Trade Commission intends to issue new rules to address fake reviews that would include a penalty of up to $50,120 per fake review. The FTC has issued a Notice of Proposed Rulemaking (NPR) and there will be a sixty-day comment period once the rule is published in the Federal Register. The FTC cited various findings on the prevalence of fake reviews which may be as high as 40 percent. Add in the emergence of AI chatbots and the FTC fears that this will only “make it easier for bad actors to write fake reviews.” As a result, the FTC believes that this must be addressed by rulemaking, as “a rule clearly spelling out prohibited practices and allowing for the judicial imposition of civil penalties could strengthen deterrence and FTC enforcement actions.”
The FTC proposed rule would ban:
- Selling or Obtaining Fake Consumer Reviews and Testimonials: The proposed rule would prohibit businesses from writing or selling consumer reviews or testimonials by someone who does not exist, who did not have experience with the product or service, or who misrepresented their experiences. It also would prohibit businesses from procuring such reviews or disseminating such testimonials if the businesses knew or should have known that they were fake or false.
- Review Hijacking: Businesses would be prohibited from using or repurposing a consumer review written for one product so that it appears to have been written for a substantially different product. The FTC recently brought its first review hijacking enforcement action against the Bountiful for repurposing reviews for its supplement products.
- Buying Positive or Negative Reviews: Businesses would be prohibited from providing compensation or other incentives conditioned on the writing of consumer reviews expressing a particular sentiment, either positive or negative.
- Insider Reviews and Consumer Testimonials: The proposed rule would prohibit a company’s officers and managers from writing reviews or testimonials of its products or services, without clearly disclosing their relationships. It also would prohibit businesses from disseminating testimonials by insiders without clear disclosures of their relationships, and it would prohibit certain solicitations by officers or managers of reviews from company employees or their relatives, depending on whether the businesses knew or should have known of these relationships.
- Company Controlled Review Websites: Businesses would be prohibited from creating or controlling a website that claims to provide independent opinions about a category of products or services that includes its own products or services.
- Illegal Review Suppression: Businesses would be prohibited from using unjustified legal threats, other intimidation, or false accusations to prevent or remove a negative consumer review. The proposed rule also would bar a business from misrepresenting that the reviews on its website represent all reviews submitted when negative reviews have been suppressed.
- Selling Fake Social Media Indicators: Businesses would be prohibited from selling false indicators of social media influence, like fake followers or views. The proposed rule also would bar anyone from buying such indicators to misrepresent their importance for a commercial purpose.
The FTC penalty would apply on a per review per view basis, i.e, up to $50,120 for each offending review multiplied by the number of consumers who viewed it. The FTC also would possess the ability to recover money directly for anyone harmed by the fake reviews.
Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, stressed that “[t]he rule would trigger civil penalties for violators and should help level the playing field for honest companies.”
Cyber Report 