The Federal Trade Commission (FTC) announced on June 30th a new notice of proposed rulemaking (NPRM) that attempts to stop marketers from using illicit or deceptive review and endorsement practices. This proposed rule aims to protect consumers seeking genuine feedback on products and services while promoting fairness for honest businesses. Any agencies or their clients that utilize customer reviews in their marketing efforts should review the proposed rule and what the FTC calls out as prohibited “deceptive practices” and make necessary adjustments to ensure minimum compliance.

Recently, the FTC has worked to crack down on purveyors of deceptive reviews and endorsements through enforcement actions and has provided guidance to businesses on acceptable practices through the agency’s Endorsements Guides and other public materials. The FTC feels a new rule clearly spelling out prohibited practices and allowing for the judicial imposition of civil penalties could strengthen deterrence and FTC enforcement actions. The proposed rule, if adopted in its current form, would impose civil penalties on violators, ultimately leveling the playing field for ethical companies.

In its notice of proposed rulemaking, the FTC cites examples of what the Commission feels are clearly deceptive practices involving consumer reviews and testimonials from its past cases. It also mentions the widespread emergence of generative AI, which more easily facilitates bad actors’ ability to write fake reviews.

As part of the NPRM, the FTC is seeking comments on proposed measures that would fight what it perceives as deceptive practices. More specifically, the proposed rule would prohibit:

1. Selling or Obtaining Fake Consumer Reviews and Testimonials: Outlaws writing or selling consumer reviews or testimonials by someone who does not exist, who did not have experience with the product or service, or who misrepresented their experiences. It also would prohibit businesses from procuring such reviews or disseminating such testimonials if the businesses knew or should have known that they were fake or false.
2. Review Hijacking: Bans a marketer from using or repurposing a consumer review written for one product so that it appears to have been written for a substantially different product.
3. Buying Positive or Negative Reviews: Prohibits a business from providing compensation or other incentives conditioned on the writing of consumer reviews expressing a particular sentiment, either positive or negative.
4. Insider Reviews and Consumer Testimonials: Forbids a company’s officers and managers from writing reviews or testimonials of its products or services, without clearly disclosing their relationships.
5. Company Controlled Review Websites: Prevents creating or controlling a website that claims to provide independent opinions about a category of products or services that includes its own products or services.
6. Illegal Review Suppression: Forbids a business from using unjustified legal threats, other intimidation, or false accusations to prevent or remove a negative consumer review; it also bars a business from misrepresenting that the reviews on its website represent all reviews submitted when negative reviews have been suppressed.
7. Selling Fake Social Media Indicators: Disavows selling false indicators of social media influence, like fake followers or views. The proposed rule also would bar anyone from buying such indicators to misrepresent their importance for a commercial purpose.

The NPRM notice includes nearly two dozen questions for public comment to inform the Commission’s decision-making on the proposal. These questions focus on provisions in the proposed rule and whether other provisions should or should not be included in the rule. After the Commission reviews the comments received, it will decide whether to take the necessary next steps toward issuing a final rule.

The NPRM will be published in the near future, thereby starting the clock on the 60-day public comment period.

The new proposed rule succeeds an advance notice of proposed rulemaking issued by the FTC in November 2023. As part of this ANPRM, the FTC received comments from individual consumers, trade associations, review platform operators, small businesses, consumer advocacy organizations, entities dedicated to fighting fake reviews, and academic researchers.

Whether the proposed rule will equally empower merchants to remove unwarranted negative reviews as compared to the removal of unfair and deceptive positive reviews is yet to be seen.

Have questions about the FTC’s new NPRM on the Use of Reviews and Testimonials, please contact Jim Potter, CHC Executive Director at jpotter@cohealthcom.org.