A federal ban on fake online reviews is now in effect, marking a significant shift in online commerce practices. The Federal Trade Commission (FTC) has prohibited the creation, sale, and purchase of fraudulent reviews and testimonials, including those generated by artificial intelligence (AI).
This rule was finalized in August and became effective 60 days after its publication in the Federal Register, following unanimous approval by the FTC’s commissioners.
The new rule bars businesses from fabricating reviews and attributing them to non-existent individuals or AI-generated personas. It also outlaws false celebrity endorsements and prevents companies from offering incentives to real customers in exchange for positive or negative reviews. Reviews from individuals closely associated with a company, such as family members or friends of employees, must also be disclosed, and there are strict limits on soliciting reviews from close relatives of employees.
Moreover, the rule restricts businesses from suppressing negative reviews, ensuring that feedback is not selectively presented. The regulation also addresses the sale and purchase of fake social media followers and views, aiming to curb the inflation of influence or importance for commercial purposes.
Violating these regulations can lead to steep fines, with penalties reaching up to $51,744 per infraction. FTC Chair Lina Khan emphasized the importance of this rule, stating that fake reviews not only mislead consumers but also undermine fair competition in the marketplace. The rule aims to create a more transparent and trustworthy environment for consumers and businesses alike.
This new regulation adds to the FTC’s efforts to protect consumers, including a recently finalized rule that simplifies the process for canceling subscriptions, making it as easy as signing up for them.
Featured Image courtesy of Freepik
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