Advertising Law Blog

On August 14, 2024, the Federal Trade Commission (“FTC”) announced and published a final rule banning fake reviews and testimonials. Although unfair or deceptive acts and practices are already generally unlawful, the new rule will enable the FTC to more easily go to court and seek civil penalties against knowing violators. The rule, published at 16 CFR Part 465, takes effect this October 13th.

The applies to the following major types of conduct:

1. Fake or False Reviews and Testimonials: This category, which explicitly includes celebrity testimonials, establishes a ban on publishing reviews or testimonials from someone who does not exist, such as AI-generated reviews, fictional people and anyone with no actual experience with the business or its products or services. It also prohibits the creation, purchase or sale of such items as well as disseminating them if the business knows or should know that the reviews or testimonials were illegitimate.
2. Buying Positive or Negative Reviews: The rule prohibits businesses from providing compensation or other incentives conditioned on the writing of consumer reviews, whether positive or negative.
3. Insider Reviews and Consumer Testimonials: Reviews and testimonials from company insiders are prohibited unless the insider’s connection is conspicuously disclosed. Also prohibited is the dissemination of testimonials that the business should have known came from an officer, manager, employee or agent.
4. Company-Controlled Review Websites: The new rule prohibits a business from misrepresenting that a website or entity it controls provides independent reviews or opinions about a category of products or services that includes its own products or services.
5. Review Suppression: A business may not use unfounded or groundless legal threats, physical threats, intimidation, or certain false public accusations to prevent or remove a negative consumer review. It also bars misrepresenting that the reviews represent all or most of the reviews submitted if negative reviews have been suppressed.

Takeaway: Although the practices described in this article are already illegal, beginning in October, the use of fake or misleading reviews to sell products or services will become even riskier. This is the case because the FTC’s new regulations provide it with an expedited path for seeking civil penalties in federal court.