Overview:
The Federal Trade Commission issued a final rule banning fake reviews and testimonials, making it easier for violators to be tried in court.
Background
According to a recent survey by Bright Local, 93% of consumers make decisions in part based on online reviews. As a result, when online reviews are falsified, coerced, or otherwise compensated, consumers are effectively deceived. The Federal Trade Commission regulates false and deceptive advertising and related business practices, including fake reviews and testimonials. Still, online communications are difficult to track, let alone adjudicate, so the FTC has issued a new final rule banning fake reviews and fake testimonials.
The new rule takes effect on October 13. It forbids:
- Fake reviews, endorsements, or testimonials. This part of the final rule forbids reviews written by individuals without experience with the business or its products/services, reviews that misrepresent the customer’s experience, and reviews written by nonexistent people, including AI-generated reviews. It also includes a prohibition on creating or purchasing reviews the business knows or should know are fake.
- The practice of paying for or incentivizing reviews that express a particular sentiment, including implied requests.
- Reviews by company officers or managers. Reviews by other company insiders or their relatives, employees, or agents are prohibited unless disclosed.
- Company-controlled review websites.
- The suppression of reviews using threats, intimidation, or false public accusations.
- Buying and selling fake followers or reviews on social media, when the buyer knew or should have known they were fake.
The FTC believes these are already illegal practices. However, starting in October, the rule will make it easier for courts to impose civil penalties on businesses.
Surveys, False Advertising, Testimonials
Will we see litigation surveys used for disputes arising from fake reviews or testimonials? We may. Consumers often may consider information in reviews and testimonials to make decisions about expensive purchases, such as buying a car or booking a trip. When the FTC or a competitor sues a business for using fake reviews, there may need to be evidence on how consumers perceived the reviews or whether the reviews influenced the consumer behaviors.
MMR Strategy Group conducts reliable surveys used as evidence in false and deceptive advertising litigation of consumer response to ads, including the materiality of disputed advertising claims. In a case involving reviews, a survey designed to measure consumer perception of those reviews, or reliance on them to make a purchasing decision could be useful. MMR will continue to report on cases arising from this new rule.
Contact MMR Strategy Group if you require reliable consumer survey research.