Federal Trade Commission Announces Final Rule Banning Fake Reviews and Testimonials

The Federal Trade Commission (FTC) has announced a final ruling that aims to prevent the creation and dissemination of fake reviews and testimonials by making it illegal to buy or sell them. Violators who are aware of their actions may incur civil penalties. The rule takes effect on Oct 21, 2024.

The new rule directly addresses and prohibits:

1. Fake or false consumer reviews, testimonials, and celebrity testimonials,
2. Buying either positive or negative reviews,
3. Insider reviews and consumer testimonials without full disclosure of connection to the business,
4. Company-controlled review websites that falsely represent themselves as independent,
5. Review suppression driven by unfounded legal or physical threats, intimidation, or false public accusations,
6. Misuse of fake social media indicators such as bot-driven followers or views.

This regulation is expected to strengthen the FTC's ability to enforce fair and honest competition. It was approved unanimously (5-0) by the Commission.

To ensure compliance and avoid FTC enforcement actions, businesses should review their policies and make corrections as necessary. Compliance actions include implementing practices to identify and correct any non-compliant reviews and testimonials, and ensuring all reviews and testimonials are managed and published without bias, alteration, or fabrication. Employees, affiliates, and partners should be informed about the rule to avoid unintentional violations.