The US Federal Trade Commission (FTC) has implemented a significant new rule aimed at combating deceptive online practices by banning fake reviews and testimonials. Announced on August 14, 2024, this regulation prohibits companies from creating fraudulent reviews, whether generated by artificial intelligence or by individuals who lack genuine experience with the products or services they are endorsing. The FTC’s decision marks a crucial step in addressing the growing issue of misleading information that skews consumer perceptions and undermines honest competition.
In addition to targeting fake reviews, the new rule also addresses the purchase of social media influence through artificial means, such as fake followers and bots. This aspect of the regulation aims to prevent businesses from artificially inflating their online presence and manipulating consumer perceptions through deceptive practices. The rule also mandates that any reviews from individuals with a material connection to the company—such as employees or their immediate relatives—must be disclosed to ensure transparency and prevent conflicts of interest.
The FTC’s crackdown on deceptive practices is part of a broader effort to enhance market fairness and protect consumers. The rule will come into effect 60 days after its publication in the Federal Register, and violations will result in civil penalties rather than criminal charges. FTC Chair Lina M. Khan emphasized that the new rule is designed to safeguard consumers from being misled by false reviews and to ensure a level playing field for businesses that operate honestly.
This regulatory move follows a period of increased scrutiny by the FTC under the Biden administration, which has focused on enforcing rules to combat scams and deceptive advertising. The FTC’s action against fake reviews and social media manipulation highlights its commitment to upholding market integrity and fostering a fair and competitive environment for both consumers and businesses.
Reference:
