From staff reports WASHINGTON – The Federal Trade Commission voted unanimously to ban marketers from using fake reviews, such as those generated with Artificial Intelligence (AI) technology, and other misleading practices to promote their products and services.
All five FTC commissioners voted Aug. 21 to adopt the final rule, which will go into effect 60 days after it is published in the Federal Register, the government’s official catalog of rules and notices. Consumers can expect to see the FTC’s ban go into effect starting in mid-October.
“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 Khan wrote in a statement.
The final rule prohibits selling or buying fake consumer reviews or testimonials and celebrity testimonials, buying positive or negative consumer reviews, creation of consumer reviews or testimonials by company insiders without clearly disclosing their relationships, creating a company-controlled review website that falsely purports to provide independent reviews, review suppression practices, and selling or purchasing fake indicators of social media influence.
The FTC’s rule forbids companies from paying for either positive or negative reviews to falsely boost or denigrate a product. It also forbids marketers from exaggerating their own influence by, for example, paying for bots to inflate their follower count.
Violations of the rule could result in fines being issued for each violation, according to the rule. This means that for an e-commerce site with hundreds of thousands of reviews, penalties for fake or manipulated reviews could quickly add up.
Violations of any trade regulation rule enable the FTC to seek civil penalties of $51,744. The FTC could take the position that each fake review or testimonial is a separate violation. In addition, any entity or person who violates the rule (regardless of the state of knowledge) is liable for any injury caused to consumers by the rule violation.