Fake reviews have become a significant problem on the internet, but there is some promising news in the fight against them. The Federal Trade Commission (FTC) recently proposed new rules to crack down on businesses that buy, sell, and manipulate online reviews. If these rules are approved, they will come with a significant penalty: a fine of up to $50,000 for each fake review that consumers are exposed to.
This move by the FTC represents the most significant action taken by the federal government thus far to combat the deceptive market surrounding fake reviews. However, it’s worth noting that the proposed rules do not place as much direct accountability on major review sites like Yelp, Google, TripAdvisor, and Amazon.
You have likely encountered this issue yourself—thousands of suspicious five-star reviews for a mediocre product or even instances where merchants offer payment in exchange for positive reviews. This fraudulent activity weakens our collective consumer power and undermines our ability to make informed decisions.
The FTC’s proposed rules aim to address this problem and provide a deterrent to those involved in the production and dissemination of fake reviews. By imposing substantial fines, they hope to discourage businesses from engaging in these deceptive practices and protect consumers from misleading information.
It remains to be seen how these rules will be implemented and whether they will significantly impact curbing the prevalence of fake reviews. Nonetheless, this step by the FTC demonstrates a commitment to tackle the issue and restore trust in online reviews, benefitting consumers.
The Rise of Fake Reviews in Online Shopping
Samuel Levine, director of the FTC’s Bureau of Consumer Protection, mentioned, “Anyone who’s done any shopping online knows that trying to actually get objective information about the product is so fraught because there’s so much commercial misinformation, so many deceptive reviews.”
According to consumer advocacy groups and researchers like U.S. PIRG, it is estimated that approximately 30 percent to 40 percent of online reviews are fake or fabricated in some way. However, the prevalence of fake reviews can vary significantly depending on the type of product and the website in question.
Global businesses specialize in creating fake reviews, catering to scammers and merchants seeking a quick and deceptive way to boost their reputation. This issue is particularly concerning in an era where artificial intelligence, such as ChatGPT, can produce incredibly human-like writing, further exacerbating the problem.
Until now, the federal government has dealt with this issue case-by-case through legal action and lawsuits. However, their approach is changing with the recent proposal of new rules by the Federal Trade Commission (FTC), indicating a more comprehensive and proactive stance.
By introducing these new rules, the government aims to tackle the problem of fake reviews more systematically instead of relying solely on individual lawsuits. This shift reflects a recognition of the widespread nature of the issue and the need for a more holistic approach to combat it effectively.
Prohibited Activities and Accountability in the Proposed FTC Rules
The Federal Trade Commission (FTC) believes that fake reviews have always violated the law due to their misleading nature and the harm they cause to consumers. However, the FTC’s proposed rules aim to provide clearer guidelines on who is responsible for these deceptive practices and grant the FTC greater authority to act against them.
Under the proposed rules, certain activities would be explicitly prohibited. This includes reviews that distort or misrepresent someone’s experience with a product and reviews falsely claiming to be written by individuals who do not exist. Additionally, reviews written by insiders such as company employees would be unacceptable unless clear disclosures are made.
These rules target the individuals who create and write fake reviews and extend the responsibility to middlemen who facilitate their procurement and the companies that pay for them. Companies are expected to exercise due diligence and should have known, or at least had reason to suspect that the reviews they were involved with were fraudulent.
The proposed rules are currently open for a two-month comment period before they can be officially codified. These rules provide a clearer framework for identifying and addressing fake reviews, empowering the FTC to take more decisive action against those who engage in these deceptive practices. This proactive approach protects consumers from misleading information and promotes a more trustworthy online environment.
The proposed rules by the FTC also address other deceptive tactics, such as review “hijacking,” where a merchant replaces honest reviews with ones for a different product. The FTC recently took its first enforcement action against a supplement maker, imposing a $600,000 fine for engaging in this practice on Amazon.
Penalties and Deterrence in the Proposed FTC Rules
Furthermore, the rules prohibit businesses from operating websites claiming to host independent reviews while covertly selling their products and services, a common occurrence in the tech industry. They also explicitly disallow the suppression of negative reviews through tactics like intimidation or legal threats.
These rules intend to deter such practices by imposing significant penalties. In addition to the potential $50,000 fine per case, the FTC would be able to retrieve money for consumers harmed by fake reviews directly.
By implementing these rules, the FTC aims to establish a strong deterrent for individuals and businesses involved in deceptive practices, ensuring they are aware of the substantial consequences they may face. This protects consumers and promotes a more transparent and trustworthy online environment.
Addressing the fake-review economy requires holding social media platforms and review sites accountable, implementing stricter verification processes, and taking a comprehensive approach to combat the problem. Companies like Facebook and Twitter are convenient forums for recruiting fake-review writers, while powerful platforms like Yelp, Google, and Amazon have control over published content but lack liability unless directly involved. Google’s legal action against individuals posting fraudulent profiles and reviews has underscored the urgency for taking decisive measures. Advocates stress the significance of addressing the complete fake-review ecosystem.
