New FTC Rule: What Are Fake Reviews for FTC Earnings Claims (4-6)

New FTC Rule Requires Strict Compliance to Avoid Fines

October 21, 2024 is The Deadline for Your Compliance Updates for Reviews

On August 14, 2024, the FTC announced its Final Trade Regulation Rule on the Use of Consumer Reviews and Testimonials, effective on October 21, 2024.

There new Rule actually has six parts (I’ll present these six parts as if they are separate rules).

1.????? Fake or false reviews.

2.????? Incentivized reviews.

3.????? Insider reviews.

4.????? Company-controlled websites.

5.????? Fake social media indicators.

6.????? Review suppression.

This newsletter edition will explain the Rule, parts 4 through 6.

The new Rules are applicable to reviews applicable to FTC earnings claims; however, the Rules apply to other types of reviews, except for specific exclusions stipulated by the FTC.

4.?? Company-Controlled Websites

It’s helpful to consider these rules as having a subject matter and a related activity.

The activity: creation of company-controlled websites (subject matter).

A website is company-controlled if:

·??????? It’s controlled by the advertiser, and

·??????? The advertiser’s products or services are reviewed.

There is a violation only if the website appears to be independent with that the result is that consumers reasonably believe that the reviews reflect independent sentiments.

Comment:

Both the FTC and NAD (National Advertising Division of the Better Business Bureau) have been active in ruling on company-controlled websites.

5.?? Fake Social Media Indicators

Activity: trafficking, distributing, or misusing.

Subject matter: fake social media indicators.

What are three examples of a fake social media indicator?

·??????? Accounts not associated with a real person (AI creation),

·??????? Using personal information without consent,

·??????? Using hijacked accounts.

The Key requirement: knowingly trafficking, distributing, or misusing fake social indicators.

6.? Review Suppression

Activity: excluding (picking and choosing).

Two Types:

·?????? Suppressing any review by threats or intimidation.

o?? Example: Notice on website to the effect that visitors are “required” to contact customer support before posting a negative review, and if a failure to contact customer support, then the visitor will not be eligible for special promotions and sales events.

·?????? Suppressing reviews that are negative or express unfavorable sentiments

Exclusions: suppression is allowed IF:

·??????? Organizing reviews “alone” provided not feedback distortion;

·??????? Only suppressing false reviews, OR;

·??????? Reviews that are harassing in nature, abusive, obscene, vulgar, or sexually explicit.

Conclusion

Earnings claim marketers, advertisers and agencies (as well as other online marketers) should review and update their review compliance practices before the deadline of October 24, 2024.

Strict compliance with the new FTC Rule on Fake Reviews is essential to avoid FTC fines.

For Informational purposes only; not legal advice

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