The new federal rule combating fake reviews took effect last month, launching the Federal Trade Commission’s (FTC) endeavor to protect consumers from misinformation related to online products and services. The regulation, first introduced in August, prohibits businesses and individuals from buying, selling, or writing fake customer reviews and testimonials. The FTC will now be able to seek civil penalties from those who knowingly procure fake reviews. In part one of this two part series, we will explore how businesses can identify and report fake reviews.
FTC’s Rule on Fake Reviews
“Fake reviews not only waste people’s time and money, but also pollute the marketplace and divert business from honest competitors,” said FTC Chair Lina Khan in August. She emphasizes that the rule helps to “protect Americans from being deceived, hold businesses that manipulate the system accountable, and foster a marketplace that is fair, honest, and competitive.”
The rule specifically targets reviewers who are deceptive, prohibiting businesses and individuals from:
- Writing, selling, or buying fake reviews.
- Creating fake profiles for people who don’t exist.
- Misrepresenting an interaction with a business.
- Offering compensation or incentives in exchange for a positive or negative review.
- Failing to disclose the reviewer’s relationship to a business, such as in the situation where an employee or relative leaves a review for a to bolster ratings,
- Claiming that reviews listed on company-controlled websites are independently published.
- Threatening others to remove reviews, including through groundless legal threats, physical threats, or public false accusations.
- Purchasing fake followers or viewers on social media, including those generated by “bots,” artificial Intelligence (AI), or “burner accounts.”
The FTC released guidance on the rule that can be reviewed here.
Why Reviews Matter
The sales landscape has undergone significant changes since pre-COVID days. Online sales, including those on e-commerce marketplaces like Amazon, are experiencing exponential growth. According to a recent forecast by Boston Consulting Group, e-commerce sales are projected to constitute 41% of global sales by 2027, up from just 18% in 2018. Clearly, online storefronts, including online reviews, play a critical role in purchasing decisions.
As e-commerce market opportunities expand, businesses face increased pressure to maintain positive online reviews. Unfortunately, this growth opportunity also results in an influx of fake reviews from competitors seeking to gain an unfair advantage and disgruntled individuals who endeavor to destroy a company’s online reputation. Because a fake review can make or break a company, businesses must take action to combat fake reviews. To date, this involves working with e-commerce platforms to flag suspicious content and filing civil lawsuits to remove the reviews. The FTC’s action will now be an additional avenue for maintaining the authenticity of online feedback.
Complying with the FTC’s New Rule
Businesses must maintain ethical review strategies to maintain a positive online presence while avoiding legal pitfalls associated with fake or incentivized reviews. Specifically, to comply with the FTC’s rule, companies should follow these the five steps:
Step 1: Don’t encourage employees to review the company, unless that relationship is explicitly stated.
Step 2: Don’t leave reviews for competitors.
Step 3: Ensure that your website and social media channels are transparent about the aggregation of reviews, and refrain from making false claims about reviews being independently published.
Step 4: Don’t pay a third-party company to generate positive reviews for your business.
Step 5: Stop financially incentivizing consumers for leaving reviews.
How Businesses Can Identify Fake Reviews
Before a company can remove a fake review, they must be able to identify them. While this can sometimes be difficult, fake reviews often have certain characteristics which indicate that they are fake. Companies should conduct regular review audits and document reviews to identify the following suspicious signs:
- Reviews from accounts with no other activity, created on the same day the review was posted.
- Reviews with suspicious timing, including multiple negative reviews on the same day.
- Reviews which repeat the same phrases or wording.
- Reviews which utilize in improper sentence structure, appearing to have been written in a different language and then translated.
- Reviews which ping to a geographic area that your business does not service.
- Reviews with impossible circumstances or that don’t match a documented customer interaction
- Reviews with brief, generic phrases that lack specifics, for example, a quick “Great product!” or “Terrible service!” might be a red flag. Genuine reviews tend to provide more detail and explanation.
- Reviews that are not verified by the E-Commerce Platforms that sold the products.
Removing Fake Reviews
Once reviews are identified, a company can take steps to remove them. In Part 2 of this series, we’ll explore how businesses can remove fake reviews, either through the new FTC portal or directly on targeted platforms, as well as the legal strategies available to safeguard your brand and reputation.
Is Your Business Under Attack? Contact an Attorney
Businesses being targeted by fake reviews have options. An internet defamation and content removal attorney can help businesses address these attacks while ensuring compliance with the applicable guidance, including the FTC’s new rule. If you have questions, please contact internet defamation and content removal attorney Alexandra Arko at 216.716.5642 or via email at ala@kjk.com.