A bad review can make or break a business. But paying for fake AI reviews is not the answer. In fact, a new federal regulation makes it a costly mistake.
The Federal Trade Commission (FTC) has banned the buying or selling of fake reviews (generated by AI or written by humans) in a final rule released Wednesday. The rule, which the FTC passed unanimously, prevents anyone who has no experience with a product from writing a review about it. It goes into effect in October and follows nearly two years of public comments, clarifications and adjustments.
Under the new regulation, companies are not allowed to buy or sell positive or negative reviews, nor are they allowed to have employees write reviews. Suppressing negative reviews by threatening or accusing the customers who wrote them is also prohibited.
Related: The FTC bans non-compete agreements – here’s what happens if you’re currently bound by one
The rule also cracks down on other methods companies might use to falsely inflate their reputation, such as the number of their social media followers. A company can no longer buy or sell followers or views from AI bots or hacked accounts to boost its credibility.
The FTC has the authority to impose a maximum fine of approximately $51,744 for each part of the regulations that a company violates.
“Fake reviews not only waste time and money, they also pollute the marketplace and drive business away from honest competitors,” FTC Chair Lina M. Khan said in a statement. “By strengthening the FTC’s tools to combat deceptive advertising, the final rule will protect Americans from fraud, hold companies that unlawfully game the system accountable, and promote fair, honest, and competitive markets.”
FTC Chair Lina Khan. Michael M. Santiago/Getty Images
The ruling follows an August 2022 FTC case against Roomster, a rental listing website that allegedly paid for tens of thousands of fake reviews. The site collected tens of millions of dollars from low-income renters and students who paid for access to listings they thought were verified and available – but were actually fake.
Fake reviews were also the focus of another complaint the FTC filed against retailer Fashion Nova in January 2022. The FTC alleged that Fashion Nova did not publish reviews with less than four out of five stars. Fashion Nova was ordered to pay $4.2 million for damages caused to customers and was ordered to stop suppressing unfavorable reviews.
Khan said that under the new rule passed on Wednesday, the FTC will soon “impose penalties on violators and refund money to those harmed by fake reviews.”
Related: Jeff Bezos and Amazon executives used an encrypted messaging app to discuss “sensitive business matters,” FTC claims
