The Federal Trade Commission recently voted unanimously to ban marketers from using fake reviews, including those generated by AI technology, and other misleading practices to promote their products and services. All five FTC commissioners voted to adopt the final rule, which will go into effect 60 days after being published in the Federal Register. The ban on fake reviews is aimed at preventing the waste of people’s time and money, as well as maintaining a fair marketplace for all businesses by preventing dishonest competition.
The new rule not only prohibits reviews written by non-humans, but also forbids companies from paying for either positive or negative reviews to falsely boost or denigrate a product. Additionally, it prohibits marketers from exaggerating their influence by employing tactics such as paying for bots to inflate their follower count. Violations of the rule could result in fines being issued for each offense, which could add up quickly for businesses with large numbers of reviews, both real and manipulated.
With the increasing prominence of e-commerce, influencer marketing, and generative AI, many advertisers are turning to automated chatbots like ChatGPT to quickly generate user reviews for products sold online. This practice has led to consumers unknowingly purchasing products based on false praise or misleading promises. Fake reviews are already illegal, and some e-commerce companies have taken steps to combat this deceptive marketing tactic, such as Amazon suing thousands of Facebook group administrators for brokering fake reviews.
The new FTC rule will subject companies to stricter government oversight, ensuring that businesses that may have previously policed themselves will now face enforcement of the ban on fake reviews. Rather than prosecuting individual cases through the Department of Justice, this rule will streamline and strengthen the FTC’s ability to enforce the ban internally. The announcement of this rule coincided with the White House’s first “Creator Economy Conference,” where Biden administration officials engaged with online influencers and digital content professionals to address concerns about the industry.
Overall, the ban on fake reviews and other misleading marketing practices serves to protect consumers from being misled and deceived when making purchasing decisions online. By prohibiting the use of fake reviews and other tactics to falsely boost or denigrate products, the FTC aims to create a level playing field for businesses and ensure fair competition in the marketplace. The rule will be enforced with fines for violations, and companies are expected to comply to avoid penalties. The new regulation reflects the changing landscape of digital marketing and the need for stricter oversight to prevent deceptive practices that harm consumers and honest businesses.
