FTC Introduces Stringent Fines for Companies Utilising Fake Reviews

The Federal Trade Commission (FTC) is suggesting an official ban on the utilisation of fake reviews and testimonials. Additionally, companies would be forbidden from artificially increasing their social media metrics by employing fake followers and views. If this proposed rule is implemented, it will carry severe penalties for those involved in promoting fake reviews and testimonials. The FTC, which has been working on this rule since October, is close to finalising it. As reported by The Washington Post, the agency intends to impose fines of up to $50,000 on businesses that engage in the “buying, selling, and manipulation of online reviews.” This penalty would apply to each fraudulent review and would be multiplied by the number of times consumers have seen it. Consequently, if the FTC discovers that a single fake review has been viewed 20 times, the business responsible for purchasing it could face a penalty of $1 million.

The proposed rule also addresses review suppression, disallowing companies from using intimidation tactics like legal threats and false accusations to force customers to remove or avoid leaving negative reviews.

According to Samuel Levine, the director of the FTC’s Bureau of Consumer Protection, their proposed rule aims to impose civil penalties on violators and level the playing field for honest companies. The rule would outlaw repurposing existing reviews to make them seem like they were written for a different product. It would also prohibit offering payments or compensation for positive or negative reviews. However, the FTC clarifies that companies can still request users to leave reviews, as it’s an important way for small businesses to enhance their reputations. Nevertheless, managers and officers cannot post reviews of their company’s products without clear disclosures, and they cannot ask family members or employees to do so under certain circumstances.