Hunton Retail Law Resource

Fake reviews and testimonials for services and products have been under the watchful eye of the Federal Trade Commission (FTC) for decades. With the proliferation of online bots and generative Artificial Intelligence (AI) tools, reviews and testimonials have been even easier to fake in recent years. On August 14, 2024, the FTC announced the Final Rule on the Use of Consumer Reviews and Testimonials, prohibiting fake reviews and testimonials from being sold or purchased by businesses. Importantly, the Final Rule enables the FTC to seek civil penalties against knowing violators.

Prohibited Practices 

The Rule prohibits:

1. Fake reviews: Writing, creating, selling, or buying fake or false consumer reviews, consumer testimonials, and celebrity testimonials. This includes fake or false reviews and testimonials created by generative AI and online bots.
2. Review buying: Buying positive or negative reviews, including providing compensation or other incentives for consumer reviews that express either positive or negative sentiment for a product, service, or business that is the subject of the review.
3. Insider reviews: Soliciting or demanding insider reviews and consumer testimonials without clear and conspicuous disclosure of the author’s relationship to the business. Specifically, it is an unfair and deceptive act or practice for officers or directors of a business to solicit or demand immediate relatives, employees, or agents of the business to write reviews about the product or services of the business and disseminate such review or testimonial, unless there is proper disclosure of the author’s relationship to the business. However, generalized solicitations to purchasers or the business engaging in consumer review hosting does not constitute a violation.
4. Company-controlled sites: Claiming that company-controlled review websites or entities provide independent reviews or opinions regarding the business’s products or services.
5. Review suppression: Suppressing negative reviews through the means of using unfounded or groundless legal threats, physical threats, intimidation, or public false accusations to prevent a negative review from being posted or causing the removal of the negative review.
6. Fake social media influence: Selling or buying fake social media indicators, including fake followers or views generated by bots or hijacked accounts.

Civil Penalties

The FTC noted that the Supreme Court’s unanimous ruling in AMG Capital Management, LLC v. FTC, 593 U.S. 67 (2021) had hindered the FTC’s ability to seek monetary damages, such as restitution or disgorgement of profits, against violators. The Rule now enables the FTC to seek monetary relief for consumers up to $52,000 per violation—yet enables courts to impose lower per-violation penalties—when businesses buy or sell fake reviews and testimonials.

The Final Rule is largely in accordance with the FTC’s Advanced Notice of Proposed Rulemaking (ANPR) and Notice of Proposed Rulemaking (NPR), which we previously wrote about here and here. The Final Rule, however, did not retain the “review hijacking” provision that would have prohibited businesses from using a review written for one product and reusing it for a “substantially different product.” The FTC also held an informal hearing on the rule in February 2024, which we previewed here.

The Final Rule is effective 60 days after its publication in the Federal Register. We expect the FTC to look to aggressively enforce the Final Rule when it takes effect. Businesses should ensure that they are in compliance with the Final Rule.