The FTC finalized updates to its rules regarding use of consumer reviews and testimonials on August 14, 2024. The FTC’s stated goal is to address issues surrounding fake or fraudulent reviews. The rule reiterates that reviews should come from real customers and reflect those real customers’ experience and opinion with the product(s) or service(s) reviewed. The Commission points out that this means using reviews generated by AI is considered fraudulent practice and may result in enforcement action against an offending business.
The rule contains two other notable provisions.
- The first is that businesses are prohibited from providing compensation or other incentives that are contingent on a customer writing a positive or negative review. A company cannot, for example, offer a 20% discount for writing a 5-star review. This does not prohibit incentivized reviews entirely, and does not prohibit all testimonials provided in exchange for free product samples. However, the Commission noted that even implied incentives may violate the rule, such as “Get 20% off for telling everyone how much you love our product.”
- The second is that the rule prohibits selling or buying fake social media indicators such as likes, follows, or reposts. This rule applies to buying social media indicators that the company knows or should know to be fake. This means that companies should carefully evaluate any social media marketing partnerships to ensure these vendors are not providing false indicators.
The rule contains several other elements and a summary from the FTC can be found here.
