FTC Cracks Down on Fake, AI-Generated Online Reviews

The FTC has taken a significant step towards combating fake reviews and deceptive marketing practices with the announcement of a new rule targeting bogus online reviews designed to trick consumers.

TechCrunch reports that in a unanimous 5-to-0 vote, the FTC has finalized a rule that aims to address various types of fake reviews and prohibits marketers from engaging in deceptive practices. The new rule, set to be enforced 60 days after its publication in the Federal Register, targets practices such as AI-generated reviews, censorship of honest negative reviews, and compensating third parties for positive reviews.

The decision comes as a response to the long-standing issue of unreliable online reviews, particularly on platforms like Amazon, where merchants have been using fake and paid reviews extensively. In 2020 alone, Amazon claimed to have shut down more than 200 million fake reviews. Yelp, another popular review platform, reported over 950 instances of “deceptive review practices” on other online platforms in 2021.

The rise of generative AI has further exacerbated the problem, making it easier for bad actors to create fake reviews. The FTC’s new rule aims to address this growing concern and improve the trustworthiness of online reviews.

Under the new rule, businesses are prohibited from using fake or disingenuous reviews, including AI-generated reviews and reviews from individuals who lack experience with the actual product. The rule also bans the buying or selling of reviews, whether negative or positive. Company insiders writing reviews must clearly disclose their connection to the business, and officers or managers are not allowed to give testimonials or ask employees to solicit reviews from relatives.

Furthermore, the rule prohibits company-controlled review websites that claim to be independent and bans the use of legal threats, physical threats, or intimidation to forcefully delete or prevent negative reviews. Businesses are also prohibited from misrepresenting that the review portion of their website comprises all or most of the reviews when they are suppressing negative ones.

The rule also extends to fake engagement, such as social media followers, likes, or views obtained through bots or hacked accounts. The maximum civil penalty for fake reviews is set at $51,744 per violation, although courts may impose lower penalties depending on the specific case.