A federal ban on fake online reviews is now in effect

The FTC has prohibited the sale or purchase of testimonials, including those generated by AI.

Kris Holt

·Contributing Reporter

Wed, October 23, 2024 at 2:17 AM GMT+7·2 min read

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Be warned, online merchants who see no issue in publishing phony reviews from made-up customers: that practice is no longer allowed. A federal ban on fake online reviews has taken effect.

The Federal Trade Commission issued a final rule on the purchase and sale of online reviews back in August and it came into force 60 days after it was published in the Federal Register. The agency’s commissioners voted unanimously in favor of the regulation.

The rule bans businesses from creating, buying or selling reviews and testimonials attributed to people who don’t exist, including those that are AI generated. False celebrity endorsements aren’t allowed and companies can’t pay or otherwise incentivize genuine customers to leave positive or negative reviews.

Certain reviews and testimonials written by people who have close ties with a company without a disclaimer is a no-no. There are restrictions on soliciting reviews from close relatives of employees too.

The rule includes limitations on the suppression of negative reviews from customers. It also prohibits people from knowingly selling or buying fake followers and views to inflate the influence or importance of social media accounts for commercial purposes.

Fines for violating these measures could prove extremely costly. The maximum civil penalty for each infraction is currently $51,744.

“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 said when the rule was finalized. “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 rule is a positive move for consumers, with the idea that reviews should be more trustworthy in the future. In a separate victory for consumer rights, the FTC recently issued a final rule to make it as easy for people to cancel a subscription as it is to sign up for one.