On Wednesday, the Federal Trade Commission (FTC) put hundreds of companies on notice that they will face steep financial penalties if they are found to be promoting or soliciting fake product reviews. The FTC’s action comes long overdue, as both businesses and individual reputations face increasing attacks from anonymous reviewers. In addition to the notice, the FTC released a resource for businesses to review to ensure that they are complying with laws mandating authentic content and online advertising.
COMBATTING RISE OF FAKE PRODUCT ENDORSEMENTS AND REVIEWS
The FTC’s action is an attempt to curb the influx of fake product endorsements and reviews flooding the internet. “Fake reviews and other forms of deceptive endorsements cheat consumers and undercut honest businesses,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection, in a statement. “Advertisers will pay a price if they engage in these deceptive practices.”
The FTC will conduct administrative proceedings to determine whether product endorsements or reviews are deceptive. If the endorsements or reviews are found to be deceptive, the FTC will issue a cease-and-desist order, after which they can pursue civil penalties in a federal district court.
PENALTIES FOR COMPANIES FOUND TO HAVE FAKE REVIEWS OR ENDORSEMENTS
Companies found responsible for violations could face fines of up to $43,792 per fake review. The FTC said that increasing popularity of social media and online review platforms has “blurred the line(s) between authentic content and advertising, leading to an explosion in deceptive endorsements across the marketplace.”
FAKE ENDORSEMENTS ON SOCIAL MEDIA AND REVIEW PLATFORMS
While most social media and review platforms have policies in place that prohibit the publication of fake reviews on their platforms, each platform retains the ultimate authority to sort and organize reviews in accordance with its own internal algorithms. These algorithms can change if companies pay to advertise with the review platform. Additionally, people and organizations often solicit fake endorsements in an attempt to cheat the algorithms and control search rankings. These fake endorsements, which can be positive or negative, artificially inflate rankings and result in a situation where consumers have no idea which reviews represent truthful marketplace interactions. The FTC’s notice presents a clear attempt by the FTC to combat the fake review epidemic.
THE FTC’S NOTICE APPLIES TO ALL PRODUCT ENDORSEMENTS ON THE INTERNET
While e-commerce giants Amazon and Walmart have come under recent scrutiny regarding their online reviews, it should be clear that the FTC is not limiting its notice to e-commerce and online review platforms. Rather, the FTC’s notice applies to all product endorsements on the internet, which likely also includes promotional posts by influencers and content creators on social media platforms like Instagram and TikTok and online publications by college athletes with regard to name, image and likeness.
KJK’S ATTORNEYS HELP FIGHT FAKE REVIEWS
Beyond facing steep fines by the FTC, companies and individuals publishing fake reviews and endorsements also face the threat of litigation. KJK’s Internet Defamation and Content Removal and eCommerce groups regularly work with clients to combat the publication of fake reviews. By identifying the sources of fake reviews and litigating against parties who engage in these deceptive practices, KJK can act as another arm to combat review and endorsement manipulation.
Review and endorsement manipulation has a devastating impact on businesses, individuals and the flow of truthful information. If you or your brand are facing online review manipulation or you want to establish stronger brand protection that complies with the FTC’s guidelines, please reach out to KJK Internet Defamation and Content Removal attorney Ali Arko or eCommerce attorney Kyle Stroup.