FTC’s New Rule on Fake Reviews

Online reviews are the lifeblood of the modern marketplace. They influence buying decisions, build—or break—brands, and can make or break a business reputation in the blink of an eye. However, not all reviews are created equal.

Hello world of fake reviews, where authenticity goes to die.

The good news? The Federal Trade Commission (FTC) is creating new rules that could change this.

The problem with fake reviews

We’ve all seen them: glowing five-star reviews that seem a little too enthusiastic or oddly similar reviews cropping up across different products. Fake reviews are everywhere, and they are a bigger problem than most realize. These bogus opinions aren’t just annoying—they’re a full-blown epidemic that erodes consumer trust and damages the credibility of honest businesses.

Studies have shown that 82% of consumers have read a fake review in the past year, with 54% admitting they couldn’t always spot them. These reviews mislead customers, distort market competition, and ultimately harm everyone involved, from the business trying to play fair to the consumer just looking for a decent product​.

The legal and financial risks for businesses

So, what happens if you get caught up in this mess? The risks are real—and they’re serious. Business owners caught submitting fake ratings on platforms like Google could face prosecution for false advertising under state law. If you’re targeting a competitor with fake negative reviews, defamation laws could come into play, leading to even more severe consequences.

But it doesn’t stop there.

The FTC’s new rule is setting the stage for even harsher punishments. We’re talking fines of up to $50,000 for each fake review that’s viewed. Let that sink in: each time someone sees that fake review, it could cost you a small fortune​.

And don’t forget about Google itself—getting caught could result in penalties that knock your business down the search rankings, costing you valuable visibility and revenue.

What you need to know

So, what’s in this new FTC rule? As always, a lot, but if we try to break it down into something somewhat digestible:

• No Fake Reviews: It’s now illegal to make up, buy, sell, or share fake reviews—whether they’re human-written or generated by AI.
• No Bribery: Businesses can’t pay or reward people for leaving positive reviews.
• Transparency is Key: If you have a connection to a business, you must disclose it when leaving a review.
• No Bullying Tactics: Using legal threats to scare customers into removing negative reviews is also off the table.
• No Fake Popularity: Buying or selling fake likes, followers, or views on social media is strictly prohibited​.

These rules aren’t just about cracking down—they’re about leveling the playing field.

Best practices for businesses

Now that you know the risks, how do you protect your business? Here’s a quick playbook:

1. Encourage Authentic Feedback: Make it easy for your actual customers to leave reviews. Ask them directly after a purchase or service, and let them know how much their honest opinion means to you.
2. Monitor Your Reviews: Use tools to monitor your reviews. Flag anything suspicious and take immediate action.
3. Handle Negative Reviews Professionally: Instead of trying to erase bad reviews, respond to them. Show that you’re listening, and use the feedback to improve. A well-handled negative review can turn into a positive one.
4. Stay Transparent: If you have connections with reviewers, disclose them. It’s better to be upfront than to face legal trouble later.

The future of online reviews

The FTC’s new rule is a wake-up call for businesses to take their online reputations seriously. In a world where trust is currency, authenticity isn’t just nice to have—it’s essential. As we progress, the thriving brands will embrace transparency, engage authentically with their customers, and steer clear of shady practices.

Besedo’s CEO, Petter Nylander, adds: “Our content moderation services are designed to keep your business compliant, trustworthy, and ahead of the curve. Let’s work together to build something real.”

The new rules become effective 60 days after being officially published by the FTC, meaning it will be in effect in October 2024.

Share this article