- The FTC has finalized a new rule aimed at protecting consumers from fake reviews and testimonials, leveraging its authority under the FTC Act to regulate deceptive or unfair commercial practices.
- The Trade Regulation Rule on the Use of Consumer Reviews and Testimonials (Final Rule) prohibits a range of deceptive practices, including the use of fake consumer and celebrity reviews; offering compensation or incentives for positive or negative reviews; and having company officers, managers, or other insiders write or solicit reviews without disclosing their connection to the company. The rule also targets companies that operate websites posing as independent review platforms, the manipulation of fake social media metrics, and the use of threats or intimidation to silence negative reviews.
- Notably, the practice of “review hijacking,” where a seller steals or repurposes reviews from another product, was excluded from the Final Rule. The FTC cited unresolved concerns regarding how to define a “substantially different product” as the reason for its exclusion but left the possibility open for future rulemaking on this practice.
- The Final Rule also buttresses the FTC’s limited remedial authority concerning fraudulent or deceptive reviews by authorizing the FTC to seek civil penalties of up to $51,744 per violation.
- We previously covered the FTC’s proposed rulemaking and request for public comment to study the prevalence of these practices, costs and benefits of a potential rule, and possible alternatives to rulemaking.