The new FTC rule addresses reviews that misrepresent or deceive consumers, targeting those created by non-existent individuals or AI-generated content.12 It prohibits businesses from creating, selling, or purchasing fake reviews, as well as procuring them from company insiders.3 The ban extends to reviews written by individuals who lack actual experience with the product or service being reviewed.4 Violators can face significant penalties, with the FTC able to seek civil penalties of up to $51,744 per transgression.15 This comprehensive approach aims to enhance the reliability of online reviews and protect consumers from misleading information in the digital marketplace.

The FTC's new rule explicitly prohibits businesses from providing compensation or incentives for reviews that express a particular sentiment, whether positive or negative12. This ban extends to both explicit and implicit offers of compensation, addressing a common tactic used to manipulate product ratings and consumer perceptions. By eliminating financial motivations for biased reviews, the FTC aims to ensure that online feedback more accurately reflects genuine consumer experiences, fostering a more trustworthy marketplace for both shoppers and honest competitors34.

The FTC's rule addresses the issue of insider reviews by prohibiting testimonials from company insiders that fail to disclose their connection to the business12. Reviews from officers or managers are specifically banned, and businesses are prohibited from disseminating testimonials they should have known were from insiders. Additionally, the rule imposes requirements when company officials solicit reviews from immediate relatives or employees2.

To prevent the suppression of negative feedback, the FTC prohibits businesses from using unfounded legal threats, physical intimidation, or false accusations to remove or prevent negative reviews32. Companies are also barred from misrepresenting the overall sentiment of reviews on their platforms by selectively displaying only positive feedback while suppressing negative ones2. These measures aim to ensure a more balanced and honest representation of consumer experiences online.

The FTC's new rule extends beyond product reviews to address deceptive practices in social media influence. It prohibits the sale or purchase of fake indicators of social media influence, such as bot-generated followers or views from hijacked accounts12. This ban specifically targets situations where the buyer knew or should have known that these indicators were fake and misrepresent their influence or importance for commercial purposes34. By tackling this issue, the FTC aims to create a more authentic social media landscape and prevent businesses from artificially inflating their online presence to mislead consumers.