FTC Bans Fake Reviews and AI-Generated Content: New Rules to Protect Consumers

The Federal Trade Commission (FTC) has implemented groundbreaking regulations to ban fake and AI-generated reviews, marking a significant move to protect consumers from deceptive practices. 

These new rules aim to ensure that online reviews are authentic, trustworthy, and reflective of genuine customer experiences, fostering a fairer digital marketplace for all.

Ban on Incentivized Feedback

The new rule explicitly forbids businesses from offering compensation or incentives for reviews that express a specific sentiment, whether positive or negative. This ban includes both direct and indirect offers of compensation, which have been commonly used to skew product ratings and manipulate consumer perceptions. By removing financial incentives for biased reviews, the FTC aims to ensure that online feedback more accurately reflects real consumer experiences, thereby fostering a more trustworthy marketplace for both shoppers and honest competitors.

Crackdown on False Reviews

The FTC’s new rule also specifically targets reviews that are misleading or deceptive, including those created by fictitious individuals or AI. It bans businesses from creating, selling, or purchasing fake reviews, as well as obtaining them from company insiders. Additionally, reviews written by people without actual experience with the product or service being reviewed are also prohibited. Violations can result in hefty penalties, with the FTC authorized to seek civil fines of up to $51,744 per offense. This rule is intended to improve the credibility of online reviews and protect consumers from false information in the digital marketplace.

Regulation of Social Media Manipulation

The FTC’s new rule addresses deceptive practices related to social media influence. It bans the sale or purchase of fake indicators of social media influence, such as bot-generated followers or views from hijacked accounts. This regulation targets situations where the buyer knew or should have known that these indicators were fake and were being used to misrepresent their influence or importance for commercial purposes. By addressing this issue, the FTC aims to create a more authentic social media environment and prevent businesses from artificially boosting their online presence to deceive consumers.

Addressing Insider and Biased Reviews

The FTC’s rule tackles the issue of insider reviews by banning testimonials from company insiders that do not disclose their connection to the business. Specifically, reviews from officers or managers are prohibited, and businesses are not allowed to share testimonials they should have known were from insiders. The rule also imposes requirements on companies when soliciting reviews from close relatives or employees.

To prevent the suppression of negative feedback, the FTC bans businesses from using baseless legal threats, physical intimidation, or false accusations to remove or prevent negative reviews. Companies are also prohibited from misrepresenting the overall sentiment of reviews on their platforms by selectively displaying only positive feedback while hiding negative ones. These provisions are designed to ensure a more accurate and balanced representation of consumer experiences online.