FTC to crack down on e-commerce scams: Fake reviews and more

(WTAJ) — When we shop online and can’t touch, hold or even test a product, many of us rely on other people’s opinions. But we’ve learned over the years that not all opinions are reliable.

With the new FTC decision, the agency wants to protect consumers by taking action against fake reviews and even preventing websites from removing negative reviews.

One of the FTC’s plans will be to take on AI head-on. Companies will be barred from using AI to generate positive reviews that would help them with searches and sales. Starting in October, retailers and merchants who violate the new rules could face fines.

The FTC published a notice on its website outlining the final rules, which will go into effect in October.

The final version of the regulations prohibits:

Fake or False Consumer Reviews, Consumer Testimonials and Celebrity Testimonials: The final rule applies to reviews and opinions that misrepresent that they come from someone who doesn’t exist, such as fake reviews generated by artificial intelligence or reviews that have no actual experience with a company or its products or services, or that misrepresent the experience of the person posting them. It prohibits companies from creating or selling such reviews or opinions. It also prohibits them from buying, soliciting from insiders, or distributing such reviews when the company knew or should have known that the reviews or opinions were false or untrue.
Buying positive or negative reviews: The final rule prohibits businesses from offering compensation or other incentives contingent on writing consumer reviews that express a particular attitude, positive or negative. It clarifies that the conditional nature of the offer of compensation or incentive can be conveyed explicitly or implicitly.
Insider and consumer opinions: The final rule prohibits certain reviews and opinions written by insiders that do not clearly and conspicuously disclose the insider’s material relationship with the company. It prohibits such reviews and opinions submitted by directors or officers. It also prohibits a company from disseminating such reviews that the company reasonably should know originate from a director, officer, employee or agent. Finally, it imposes requirements when directors or officers solicit consumer reviews from their immediate relatives or employees or agents—or when they direct employees or agents to solicit reviews from relatives and such solicitation results in reviews from the employees’ or agents’ immediate relatives.
Company-Overseen Review Sites: The final rules prohibit businesses from misrepresenting that a website or entity they control provides independent reviews or opinions about a category of products or services that includes their own products or services.
Viewing attenuation: The final rule prohibits businesses from using unfounded or unsubstantiated legal threats, physical threats, intimidation, or certain false public accusations to prevent or remove a negative consumer review. The final rule also prohibits businesses from misrepresenting that reviews in the review section of their website constitute all or a majority of the reviews submitted when the reviews have been blocked based on their ratings or negative bias.
Misuse of fake social media metrics: The final rule prohibits anyone from selling or buying false social media influence metrics, such as followers or views generated by a bot or a compromised account. This prohibition is limited to situations in which the buyer knew or should have known that the metrics were false and misrepresented the buyer’s influence or importance for commercial purposes.

“Not only do fake reviews waste people’s time and money, they also contaminate the marketplace and drive business away from honest competitors,” FTC Chairwoman Lina M. Khan said in a statement. “By strengthening the FTC’s toolkit to combat deceptive advertising, the final rule will protect Americans from fraud, notify companies that unlawfully game the system, and promote marketplaces that are fair, honest, and competitive.”

Fake reviews can not only encourage people to buy a brand’s product over another; positive reviews can also increase a company’s visibility on search engines like Google and Bing.

The Commission vote to approve the final rule was 5-0. The rule will become effective 60 days after publication in the Federal Register.

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