The Federal Trade Commission (FTC) has issued a new regulation to prevent false reviews and hold companies responsible for misleading behaviour.
Key Provisions of the New Rule
- The regulation addresses review fraud in the following ways:
- No bogus reviews: Fake reviews can not be made up, bought, sold, or shared. This includes AI-generated reviews.
- Businesses cannot pay or incentivize consumers to submit positive reviews.
- Honesty regarding connections: If you work for or have ties to a business, you must disclose this while reviewing it.
- Businesses cannot use legal threats to prevent individuals from posting critical reviews.
- No fake popularity: purchasing or selling fake likes, followers, or views on social media is strictly banned.
Lina M. Khan, the FTC Chair, stated:
“Fake reviews waste time and money, harm the marketplace, and deliberately steal business from honest competitors.”
Background and Development
The FTC developed this regulation in numerous steps:
- They suggested in November 2022 that they were considering implementing a new regulation.
- In June 2023, they released the first draft of the regulation.
- In February 2024, they organized a public meeting to consider the proposed regulation.
Along the way, they took input into account and made improvements that improved the regulation.
All five FTC commissioners agreed on their final version and voted to approve it.
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What Does This Mean?
Here’s how this updated law affects digital marketers and businesses:
- Companies must pay more attention to how they get and manage feedback.
- Keep an eye out for fake AI reviews. The FTC is aware of new technologies used to boost review scores.
- People who support online must disclose their relationships with the firms they discuss.
- Businesses cannot threaten consumers to remove negative feedback.
When these laws are implemented, the FTC may punish corporations that intentionally violate them.
Businesses may need to comply with the new requirements.
- Evaluate their present review collection processes.
- Implement more robust requirements for employee and influencer disclosures.
- Invest in customer experience improvements to organically create good feedback.
- Develop ethical techniques for dealing with negative feedback.
What is Next?
The FTC’s new regulation might improve customers’ shopping experiences and make them feel safer purchasing online.
It takes effect 60 days after being publicly published. Thus, it will be in effect in around two months.
