Technology Advisor Blog

The Federal Trade Commission (FTC) has implemented the Consumer Reviews and Testimonials Rule to combat deceptive practices in online reviews and endorsements. This new rule went into effect October 21, 2024.

“Fake reviews not only waste people’s time and money, but also pollute the marketplace and divert business away from honest competitors,” FTC Chair Lina Khan said about the rule. She also said the rule will “protect Americans from getting cheated, put businesses that unlawfully game the system on notice, and promote markets that are fair, honest, and competitive.” 

Fair, honest and competitive markets - YES, we all benefit!

The new rule bans fake reviews generated by AI, or by people who don't really have any experience with the products or services they're endorsing.  It also bans businesses from creating, selling or purchasing knowingly fake reviews and testimonials.  

Key provisions of the new FTC Rule on Fake Reviews include:

• Prohibition of Fake Reviews: Bans the creation or dissemination of reviews and testimonials by non-existent individuals, those without actual experience with the product or service, or those that misrepresent the reviewer's experience.

   

• Incentivized Reviews: Forbids offering compensation or incentives in exchange for reviews expressing a specific positive or negative sentiment.  A celebrity or influencer endorsement could break these rules.

   

• Insider Reviews Disclosure: Requires clear and conspicuous disclosure of material connections when company insiders, such as employees or family members, provide reviews or testimonials.

   

• Review Suppression: Prohibits the use of threats, intimidation, or false accusations to prevent or remove negative consumer reviews.

   

• Misrepresentation of Review Content: Bars businesses from misrepresenting that the reviews displayed on their websites represent all or most submitted reviews when negative reviews have been suppressed.

The rule, effective as of October 21, 2024, authorizes the FTC to seek civil penalties for violations, aiming to protect consumers and promote fair competition by ensuring the authenticity of online reviews and testimonials.

Dive in deeper for more information at the FTC website:

• Trade Regulation Rule on the Use of Consumer Reviews and Testimonials
• The Consumer Reviews and Testimonials Rule: Questions and Answers
• FTC Endorsement Guides:  What People are Asking

There's a lot of detail from the FTC, but the bottom line is that the marketplace becomes more trustworthy allowing honest businesses to shine through with genuine customer feedback.  The playing field is leveled when small businesses won't be overshadowed by competitors cheating by spending big budgets on fake reviews.  As AI becomes increasingly pervasive in our lives, genuine human feedback will be a refreshing and welcome experience.

About the author:

Ann Westerheim, PhD is the Founder and President of Ekaru, a Technology Service Provider of cybersecurity and IT services for small and medium businesses in the greater Boston area.  Ann is an accomplished technology innovator and leader with three engineering degrees from MIT.  She has twenty years of high tech experience in research, advanced development, product development, and as an entrepreneur. Her career has spanned a vast range of technology endeavors including research in thin film semiconductors and superconductors, microprocessor fabrication, development of early Internet medical applications, and now focusing on the application of technology in business. She has an avid focus on the "last mile" of technology and decreasing the digital divide.

https://www.linkedin.com/in/annwesterheim/