In a move that’s sure to send shockwaves through the digital world, the Federal Trade Commission (FTC) has unveiled a new rule aimed at eradicating the scourge of fake reviews. This rule is crafted for consumers and honest businesses alike, who have long grappled with the deceptive practices tarnishing the reputation and credibility of online reviews.
The FTC’s new rule is a comprehensive approach aimed at the various tactics used to manipulate online reviews. The rule prohibits creating, selling or purchasing fake reviews, including those generated by artificial intelligence, and regulates businesses that incentivize positive reviews or punish negative ones. Additionally, the rule mandates that reviews written by company insiders must disclose their affiliations.
The basis for the rule is a wide range of deceptive review practices, including reviews by people who do not exist, paid or incentivized reviews, falsely created “independent” websites, insider reviews, review suppression and purchased social media clout.
In addition to these conventional modes of review manipulation, the FTC clarifies that the final rule covers AI-generated reviews. In the rule-making process, the FTC noted that “AI tools make it easier for bad actors to pollute the review ecosystem by generating, quickly and cheaply, large numbers of realistic but fake reviews that can then be distributed widely across multiple platforms.”
The rule prohibits the writing, creation or sale of a false consumer review, consumer testimonial or celebrity testimonial. The purchase of a consumer review, consumer testimonial or celebrity testimonial about a business that the business knew, or should have known, materially misrepresents the business is prohibited by the rule.
The FTC prohibits an officer or manager (or their relatives and employees) of a business from writing or creating a consumer review or consumer testimonial about the business, or one of the products or services it sells, that fails to have a clear and conspicuous disclosure of the officer’s or manager’s relationship to the business. Businesses are not allowed to operate websites that misrepresent reviews to be independent when the business owns, operates or controls the website.
The rule prohibits the sale or distribution of fake indicators of social media influence for a commercial purpose or the purchase or procurement of fake indicators of social media influence for a commercial purpose.
The FTC may pursue alleged violators directly in federal court and seek a maximum civil penalty of up to $51,744 per violation.
The final rule is expected to become effective 60 days after publication in the Federal Register.
For more information, visit https://www.nar.realtor/.
