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The Federal Trade Commission (FTC) announced a final rule on Wednesday that will prohibit companies from creating fake online reviews and testimonials for products, according to a press release from the agency. The new rule will also require disclosure of “insider” reviews from people associated with a company that’s getting the review, stop companies from trying to suppress bad reviews, and ban the purchase of social media influence through fake followers or bots.
The FTC first began the process for this crackdown on fake reviews back in November 2022 and most recently held a hearing on the rule in February 2024. That hearing allowed the agency to hear feedback and make changes to the proposals, clarifying a number of points that may have been confusing for consumers and businesses.
The ban on fake reviews includes AI-generated reviews and real people that have no experience with the product being reviewed. Buying reviews, whether positive or negative, is also banned in any form.
So-called “insider” reviews are prohibited by employees of a given company, but the FTC also says anyone with a “material connection” to the business should also refrain from creating reviews, including “immediate relatives” of employees.
The new rule will become effective 60 days after it’s published in the Federal Register, according to an FTC press release Wednesday, and any violations will be met with civil rather than criminal penalties. The vote for the new rule was 5-0.
“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 M. Khan said in a press release. “By strengthening the FTC’s toolkit to fight deceptive advertising, the final 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.”
The FTC has been on a tear during the Biden years, beefing up enforcement of rules intended to protect consumers, attempting to crack down on scams, and keeping companies in check. Big Tech has also been in the agency’s crosshairs, which has made Khan a target of attacks by many in the business world who see her as being too forceful.
Several media reports have indicated that some big time Democratic donors to Kamala Harris’ presidential campaign against Donald Trump are making a push to oust her. But even if Harris wins, it’s not clear what she may decide to do. Oddly enough, Trump’s vice presidential candidate JD Vance has praised Khan for her anti-Big Tech stances, as the New York Times recently pointed out.
