October 22, 2024
Fake reviews or testimonials and fake followers – if you’re a business owner you better be careful. Because the FTC is now cracking down on all of it. A brand new rule says all that better be on the up and up or you could be facing real civil penalties up to $50,000 ($51,744) per violation. So business owners – listen up — oh and influencers who are paid to post reviews – you need to be paying attention too.
The FTC’s new rule just took effect yesterday and is aimed at stopping those fake reviews and testimonials as part of its mission to fight deceptive advertising so the American people who read those reviews don’t get scammed. And here’s the thing – if you see one of those fake reviews there’s a way for you to report it. Which I’ll tell you all about in a second but first – let me explain these rules.
The FTC now prohibits several things including – one — fake or false consumer reviews, testimonials or celebrity testimonials. This means the review has to come from a real customer it cannot be from someone who did not have an actual experience with the business or its products or services. These reviews cannot be ai generated. The rule prohibits businesses from creating or selling such reviews or testimonials and prohibits them from buying reviews, procuring them from company insiders, or publicizing those reviews when the business owner knows they’re fake.
Two – and this one is especially important to business owners on social media. This new rule prohibits you from pumping up your following or views or any other metric to make your business look bigger than it is online by knowingly selling or purchasing fake followers, views or other indicators to misrepresent your influence for a commercial purpose.
Three – the rule prohibits a business from providing compensation or other incentives to a person to write a review on the condition that they write something either positive or negative. This rule is to meant to stop the recent scheme of companies paying influencers to write or produce bad reviews about their competitors. But it also works the other way – companies are no longer allowed to pay influencers to post a review on the condition that it’s a good review.
Four – it prohibits certain reviews and testimonials written by company insiders that fail to clearly and conspicuously disclose the reviewer is connected to the business. The rule says officers or managers of the company are not allowed to publicly review the company.
Five – it prohibits a business from operating a website or entity that claims it provides independent reviews or opinions about a category of products or services that includes its own products or services.
And six – it prohibits a business from using unfounded or groundless legal threats, physical threats, intimidation or certain false public accusations to prevent or remove a negative consumer review.
Read more about the new rule here.
Report fraud to the FTC here.
