Picture this: you’re about to make a big purchase, but the glowing reviews you combed through turned out to be fake. Now, you realize that the stellar deal you thought you were getting was too good to be true. Unfortunately, this scenario is all too common in today’s marketplace. With 97% of consumers relying on reviews, fake evaluations have become an easy way to convince us to buy less-than-stellar products.
Enter the Federal Trade Commission’s (FTC) groundbreaking new rule: a decisive move to ban fake reviews and impose strict penalties on violators. This game-changing regulation aims to protect consumers from being misled and level the playing field for businesses committed to ethical practices.
In this blog, we’ll break down what the new rule entails, the potential fines for non-compliance, and how businesses can adapt to stay on the right side of the law—and their customers.
Why Reviews Matter
A recent study from GatherUp revealed how important reviews are to our purchasing decisions. In a survey of 1,200 respondents, GatherUp found that less than 1% of US respondents said they never read reviews before making a purchase.
The same study stated that 59% of respondents read more reviews now than they did five years ago. The bottom line: reviews are more important than ever in helping consumers make buying decisions.
Understanding the FTC’s Final Rule
The FTC began taking proposals for ways to fight fake online reviews and their surrounding deceptive business practices in 2022. Public comments took place the following year, with hearings and the final rule happening in 2024. After a process that took nearly two years, the FTCs final ruling went into effect in October of 2024.
The ruling is designed to protect consumers from being misled by false reviews and promote fairness in the marketplace by holding businesses accountable for their behavior.
Key Prohibitions Under the Rule
The sweeping nature of the rule sets several no-nos in place. These prohibitions include:
- A ban on AI-generated or otherwise fabricated reviews.
- A prohibition on misrepresenting user experiences.
- A bar on incentives for reviews with specific sentiments.
- Transparency requirements for reviews from employees, relatives or managers.
- Disclosure rules for material connections.
- Prohibition on presenting company-owned review sites as independent.
- Ban on intimidation or legal threats to silence negative feedback.
- Misrepresentation of review platforms’ neutrality.
- Prohibition on buying or selling fake followers, likes, or views to exaggerate influence.
It should also be noted that businesses can be held liable for fake reviews whether they know the reviews are fake or not!
Civil Penalties for Non-Compliance
The FTC’s new rule introduces significant civil penalties to deter deceptive practices related to reviews and testimonials. Businesses found violating the rule could face fines of up to $51,744 per violation, making compliance critical. These penalties apply to all forms of prohibited conduct, from fake reviews to undisclosed insider testimonials. By enforcing these financial consequences, the FTC aims to discourage bad actors and strengthen its ability to uphold transparency and fairness in the marketplace.
Why Does This Rule Matter?
The main thrust of the rule is to restore consumer trust in reviews and testimonials. With up to 97% of consumers stating that they read reviews before making a purchase, honest reviews are paramount to a fair shopping experience. Truthful reviews help protect consumers from financial loss and wasted time.
However, honest businesses also benefit from the rule. The new order helps protect these businesses from competitors’ unethical behavior, which leads to unfairness in the marketplace. This ruling will also apply to large marketplaces such as Amazon, compelling them to clean up fake reviews from product pages and leveling the playing field for all sellers on the platform.
What Can Businesses Do?
To start, businesses can complete a review audit. During the audit, the business can identify any potential problems, such as insider reviews or incentivized testimonials, and either remove them directly or flag them with the appropriate review platform, such as Google Business or Yelp, for removal.
Businesses should also create or update their internal policies to comply with the new rule and train employees on adherence.
Lastly, businesses should begin monitoring review sources and learn the signs of fake or misleading reviews. This can be done by verifying the authenticity of reviews on your platforms and avoiding partnerships with agencies that use dubious tactics.
Conclusion
The FTC’s new rule banning fake reviews and deceptive testimonials is a bold step toward restoring trust in the marketplace. By holding businesses accountable with hefty penalties and clear guidelines, this regulation ensures that consumers can make informed decisions based on honest feedback.
This rule presents an opportunity for businesses to align with ethical marketing practices and demonstrate transparency to their customers. Compliance isn’t just about avoiding fines—it’s about building lasting trust and loyalty in an increasingly skeptical digital world.
Need help navigating these changes? Contact the digital marketing experts at Campaignium to discuss online reviews and other strategies to help your business thrive. Let us guide you in building a compliant, transparent, and trustworthy brand!
