Fake Reviews Finally Get Regulated. FTC proposes new rules to crack down on bogus online review companies


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The web is being plagued by fake reviews, tarnishing its credibility. However, there is a glimmer of hope in the fight against this issue.

The Federal Trade Commission (FTC) has proposed new rules to crack down on businesses involved in purchasing, selling, and manipulating online reviews. If these rules are approved, they will come with a significant deterrent: a fine of up to $50,000 for each fake review, every time a consumer encounters it.

It’s essential to recognize that technology is not always on our side, but we are.

We’ve all witnessed the abundance of suspicious five-star reviews for mediocre products. Some merchants even offer incentives to customers for leaving positive reviews. This fraudulent activity undermines our collective power as consumers. Have you been a victim of fake reviews, wasting your time or money? Reach out to me via email.

Consumer advocacy groups and researchers, like U.S. PIRG, estimate that as much as 30 to 40 percent of online reviews are fabricated or not genuine. However, the prevalence of fake reviews can vary depending on the product and website.

This problem is fueled by global enterprises dedicated to generating fake reviews for scammers and merchants seeking shortcuts. With the rise of artificial intelligence, exemplified by ChatGPT’s remarkably human-like writing, the issue is poised to escalate.

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The proposed rules by the FTC aim to clarify and establish boundaries. They specifically target reviews that misrepresent someone’s experience with a product, claim to be written by non-existent individuals, or are authored by insiders without proper disclosure. The rules hold not only the writers of fake reviews accountable but also the middlemen facilitating their procurement and the companies knowingly paying for them.

There are certain gray areas. For instance, businesses can still ask their genuine customers to leave reviews, as it remains a critical tool for small enterprises to build their online reputation. Additionally, the rules do not explicitly prohibit offering legitimate customers a gift card for leaving a review, as long as it doesn’t coerce a specific opinion. However, it is advisable to disclose such incentives, particularly if the monetary value is significant.

The rules also target other dubious practices, including review “hijacking” and running websites that claim to host independent reviews while covertly promoting their own products and services. Businesses are also barred from suppressing negative reviews through intimidation or legal threats.

According to Samuel Levine, director of the FTC’s Bureau of Consumer Protection, deterring such practices is crucial, ensuring that those engaging in deceptive practices are aware of the severe consequences. In addition to the potential $50,000 fine per case, the FTC would be empowered to directly retrieve compensation for consumers harmed by fake reviews.

Enforcing these rules poses a challenge, as the FTC’s resources remain unchanged. While codifying the rules could streamline the legal process, pursuing offending businesses based overseas might still present obstacles if those countries lack a history of cooperation with the FTC.

Consumer advocates argue that addressing the broader fake-review economy is essential for a comprehensive solution. Social media platforms like Facebook and Twitter provide easy avenues for companies to recruit and hire fake-review writers. Facebook has taken down some fake review groups, and Amazon has sued leaders of over 10,000 such groups. However, the FTC’s rules don’t extend liability to social media or review sites unless these platforms are directly involved in procuring fake reviews. Furthermore, there is no requirement for sites to verify users’ identities or their actual product usage.

Companies like Yelp, Google, and Amazon have significant control over the content published on their platforms and possess valuable information about review authors. They determine which reviews are displayed, the level of proof required, and profit from their presence. Nevertheless, the FTC’s rules do not hold review sites and retailers liable unless they are directly engaged in obtaining fake reviews.

These companies claim to take the issue seriously, with Amazon reporting that it blocked over 200 million suspected fake reviews in 2022 and Yelp labeling 19 percent of reviews as “not recommended.” Recently, Google filed a lawsuit against an individual and a company for posting 350 fraudulent Google business profiles and supporting them with over 14,000 fake reviews.

However, these efforts may not be enough. Kay Dean, who operates the organization Fake Review Watch, points out that she can identify thousands of fakes manually in a single day. Without stronger incentives for self-policing, these companies are unlikely to take comprehensive action.

One suggestion is for review sites to be more transparent about removing fake reviews. This would enable consumers and external investigators to better track the activity. Saoud Khalifah, founder of Fakespot, proposes that we deserve more data and transparency regarding the reasons behind displaying certain review content.

The major review sites should no longer offer excuses. Regardless of the liability regime, it is in the interest of consumers and businesses utilizing these platforms for these companies to enhance their efforts in policing the issue. They possess the most visibility into what transpires on their platforms, often having the best opportunity to curb fraudulent activities. The FTC’s Levine calls for these companies to do more, emphasizing the need for increased vigilance and action.

The proposed rules by the FTC represent a crucial step toward combating fake reviews. While they don’t address all the underlying challenges, they establish clearer boundaries and empower the FTC to take action against those involved in deceptive practices. By holding accountable those responsible for fake reviews and facilitating their circulation, we can restore trust and integrity to online platforms, fostering an environment that empowers consumers with genuine information.

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