On August 22, 2024, the Federal Trade Commission (FTC) issued a final rule and Statement of Basis and Purpose (SBP) regarding unfair and deceptive practices involving consumer reviews or testimonials. Effective October 21, 2024, this rule aims to protect consumers by enhancing the accuracy and reliability of reviews. The rule enforces Section 5 of the Federal Trade Commission Act, which prohibits unfair or deceptive acts.
The final rule prohibits:
- Selling or purchasing fake consumer reviews or testimonials;
- Buying positive or negative consumer reviews;
- Certain insiders creating consumer reviews or testimonials without clearly disclosing their relationships;
- Creating a company-controlled review website that falsely purports to provide independent reviews;
- Certain review suppression practices and selling or purchasing fake indicators of social media influence.
Background
The FTC’s rule is part of its broader effort to increase consumer protection. On August 14, 2024, the FTC announced a final rule that aims to combat fake reviews and testimonials by prohibiting their sale or purchase and allow the agency to seek civil penalties against knowing violators. This final rule followed an Advance Notice of Proposed rulemaking (ANPRM) and Notice of Proposed Rulemaking seeking to address issues related to fake reviews and testimonials.
Implications of the Final Rule
- Enhanced Review Integrity: Businesses must ensure that all reviews and testimonials are genuine and not influenced by deceptive practices.
- Compliance Measures: Companies should review their practices related to review solicitation, insider disclosures, and review platform management to align with the new regulations.
- Legal Risks: Non-compliance could result in civil penalties and damage to consumer trust.
This rule will play a crucial role in maintaining the integrity of consumer reviews and testimonials, ultimately leading to more informed purchasing decisions.
The CommLaw Group Can Help!
If your company has questions, concerns or is interested in learning more about the rulemaking and its potential impacts, or you are interested in filing comments, please contact the attorney assigned to your account or reach out to Jonathan Marashlian at jsm@commlawgroup.com or 703-714-1313.
