FTC announces Final Rule banning fake reviews and testimonials

“Fake reviews not only waste people’s time and money, but also pollute the marketplace and divert business away from honest competitors,” said FTC Chair Lina M. Khan. “By strengthening the FTC’s toolkit to fight deceptive advertising, the final rule will protect Americans from getting cheated, put businesses that unlawfully game the system on notice and promote markets that are fair, hones and competitive.”

The final rule​, which becomes effective 60 days after publication in the Federal Register, includes:

1. Fake or false consumer reviews, consumer testimonials and celebrity testimonials:​ The final rule prohibits companies from creating or selling reviews and testimonials that misrepresent that they are by someone who does not exist (e.g., AI-generated fake reviews), or who did not have actual experience with the business or its products or services, or that misrepresent the experience of the person giving it.
2. Buying positive or negative reviews:​ The final rule prohibits businesses from paying for or incentivizing the writing of consumer reviews expressing a particular sentiment, either positive or negative.
3. Insider reviews and consumer testimonials​: The rule also prohibits company insiders from writing certain reviews and testimonials if they fail to clearly and conspicuously disclose the reviewer’s connection to the business. It also prohibits a business from disseminating such a testimonial that the business should have known was by an officer, manager, employee, or agent.
4. Company-controlled review websites​: The final rule prohibits a business from misrepresenting that a website or entity it controls provides independent reviews or opinions about a category of products or services that includes its own products or services.
5. Review suppression​: Businesses are prohibited from using unfounded or groundless legal threats, physical threats, intimidation or certain false public accusations to prevent or remove a negative consumer review.
6. Misuse of fake social media indicators​: The rule prohibits anyone from selling or buying fake indicators of social media influence, such as followers or views generated by a bot or hijacked account. This prohibition is limited to situations in which the buyer knew or should have known that the indicators were fake and misrepresent the buyer’s influence or importance for a commercial purpose.

A release from the FTC stated that the Supreme Court’s decision in AMG Capital Management LLC v. FTC has hindered the commission’s ability to seek monetary relief for consumers under the FTC Act. “This rule will enhance deterrence and strengthen FTC enforcement actions,” the commission stated.

In a LinkedIn post about the rule, Lauren Aronson, advertising and consumer protection partner at Amin Wasserman Gurnani LLP, said, “We can expect aggressive FTC enforcement after the rule goes into effect... The maximum civil penalty is currently $51,744 per violation. Any practices not covered by the Rule are still covered by Section 5 of the FTC Act.”