The FTC has finally banned a marketing tactic!
The Federal Trade Commission (FTC) has taken a decisive step in cracking down on companies that try to deceive consumers with fake online reviews and testimonials. The new rule not only prohibits fake reviews but also requires disclosure of any reviews from individuals connected to the company. Additionally, it puts an end to the practice of burying negative reviews and buying social media influence with fake followers or bots.
The Origin of the Ban
This ban saga began in November 2022, culminating in a hearing held by the FTC in February 2024 to refine the proposed rules. The ban encompasses AI-generated reviews and reviews from individuals without experience with the product. Purchasing reviews, whether positive or negative, is strictly forbidden. Company employees and individuals with a “material connection” to the business, including immediate family members, are prohibited from creating internal reviews.
When Does this Rule Take Effect and What are the Consequences?
The new rule will come into force 60 days after its publication in the Federal Register, with violators facing civil fines. The unanimous 5-0 vote for the rule reflects a strong stance against fake reviews. FTC Chair Lina M. Khan emphasized that fake reviews not only mislead consumers but also harm fair competition in the market. The FTC’s efforts to combat deceptive advertising aim to protect consumers from scams, hold law-violating companies accountable, and ensure fair and competitive markets.
Reports indicate that some prominent Democratic donors are pushing to remove Khan due to her crackdown on deceptive practices. In an interesting turn of events, JD Vance, Trump’s former VP candidate, has praised Khan for her anti-Big Tech stance.
