FTC Puts Companies on Notice Over Suspected Fake Review Practices

Key Takeaways

• FTC Steps Up Enforcement: The agency warned 10 companies over potential violations of its Consumer Review Rule.
• Real Penalties at Risk: Violations can carry civil penalties of up to $53,088 per instance.
• Broad Scope of Prohibitions: The Rule covers fake reviews, paid sentiment, undisclosed insider testimonials, review suppression, and fake social media influence.
• Warnings, Not Final Judgments: The letters are not formal findings but put companies on notice to correct practices immediately.
• Compliance Clock Is Ticking: Companies have five business days to identify compliance owners and outline remediation steps.

Deep Dive

The Federal Trade Commission is sending a message to companies that play fast and loose with online reviews. FTC staff issued warning letters to 10 companies, flagging potential violations of the agency’s relatively new Consumer Review Rule, which targets fake, misleading, and manipulated product reviews.

The letters do not accuse the companies of formal wrongdoing, at least not yet. But they make clear that the agency believes problematic conduct may already be underway and that continued non-compliance could trigger federal lawsuits and steep civil penalties.

“Fake or false consumer reviews are detrimental to consumers’ ability to make accurate and informed choices about the products they are buying—something of particular importance during the holiday season,” said Christopher Mufarrige, director of the FTC’s Bureau of Consumer Protection. As more shoppers rely on online reviews to guide purchasing decisions, he said, the agency is intent on making sure companies play by the rules.

A Rule Designed to Bite

The Consumer Review Rule, formally known as the Trade Regulation Rule on the Use of Consumer Reviews and Testimonials, became fully effective on October 21, 2024. Unlike earlier enforcement efforts that leaned on general deception standards under the FTC Act, the Rule gives the Commission explicit authority to seek civil penalties—up to $53,088 per violation.

According to the FTC, the warning letters were based on consumer complaints as well as information provided by the companies themselves. While the agency stressed that the letters are not final determinations of violations, they are intended to put recipients on notice that staff believes prohibited conduct may have occurred.

What the FTC Is Watching Closely

The Rule casts a wide net over review-related practices that the agency considers deceptive or unfair. Among other things, it prohibits companies from publishing or disseminating reviews that misrepresent whether a reviewer actually used a product or whether their experience was positive or negative. Buying, selling, or soliciting such reviews, whether directly or through insiders, is also barred when a company knew or should have known the reviews were fake.

The Rule also takes aim at more subtle forms of manipulation. Businesses may not condition compensation or incentives on reviewers expressing a specific sentiment, such as offering gift cards only for five-star reviews. Company insiders, including executives and employees, must clearly disclose their connection to the business when writing testimonials, as must immediate family members whose reviews are solicited by insiders.

Other provisions address company-controlled review websites that claim to offer independent opinions without disclosing ownership, efforts to suppress negative reviews through intimidation or misrepresentation, and the misuse of fake social media indicators like bot-generated followers or views.

In the warning letters, FTC staff said they have reason to believe each recipient has engaged in at least some of this prohibited conduct, based on the information reviewed.

A Short Timeline to Fix Problems

The FTC is giving the companies little time to respond. Within five business days of receiving the letter, each recipient must identify who is responsible for Consumer Review Rule compliance and describe the steps they plan to take to come into line with the Rule. Companies are also urged to immediately stop any non-compliant conduct and remove problematic reviews from websites under their control, as well as make best efforts to have them removed from third-party platforms.

The letters warn that continued non-compliance could lead to further legal action, including federal lawsuits and civil penalties.

The FTC’s warning letters suggest that the agency is prepared to move quickly from notice to enforcement, particularly when consumer trust, and holiday spending, are on the line.

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