FTC proposes ban on paid and fake reviews online

Updated on: 05 July 2023

Gintaras Radauskas
Senior journalist

Customer review — Image by Shutterstock.

The US Federal Trade Commission wants to make it illegal for companies to deceive consumers and boost product sales by using fake or paid reviews.

How many times have you read brilliant reviews of some product but, after buying it, realized that it wasn’t actually any good? Well, there are loads of such unfortunate incidents – and it’s largely down to these evaluations being either fake or paid for.

Individual companies, including Amazon, are worried about their brand reputation and have been busy taking legal action against fake and misleading reviews and their brokers. Now, the US federal government is planning to get involved.

The US Federal Trade Commission has just proposed a new rule to stop marketers from using illicit review and endorsement practices, such as using fake reviews, suppressing honest negative reviews, and paying for positive reviews.

Such misleading recaps deceive consumers looking for real feedback on a product or service and undercut honest businesses.

“Our proposed rule on fake reviews shows that we’re using all available means to attack deceptive advertising in the digital age,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “The rule would trigger civil penalties for violators and should help level the playing field for honest companies.”

In its notice of proposed rulemaking, the FTC cited examples of clearly deceptive practices involving consumer reviews and testimonials from its past cases. It also noted the widespread emergence of generative AI, which is making it easier for bad actors to write fake reviews.

Five review platforms – Yelp, Trustpilot, Google, Tripadvisor, and Amazon – submitted comments to the FTC. Yelp said it supported civil penalties for deceptive reviews because consumer trust is extremely important to the company.

In one Yelp survey, 71 percent of respondents said that they would no longer visit a business if they learned the business has fake or compensated online reviews. As a first line of defense, Yelp uses automated software systems in order to detect biased reviews.

Amazon didn’t state either support or opposition to the rulemaking, the FTC said. But the e-commerce giant said that in 2021 alone, it invested more than $900 million and employed more than 12,000 people who were dedicated to protecting customers and its store from fraud and other forms of abuse.

The FTC said its proposed rule would prohibit selling or obtaining fake consumer reviews. Review hijacking, which happens when businesses use or repurpose a consumer review written for one product so that it appears to have been written for a radically different product, would also be banned – as would buying positive or negative reviews.

Businesses would also be prohibited from trying to suppress authentic negative reviews and selling or buying false indicators of social media influence, like fake followers or views.

The problem of fake online reviews being bought and sold goes back to the early days of the internet, and so far, efforts to stop illegal activity have been futile.