United States of America: Adopted FTC Rule Banning Fake Reviews and Testimonials

On 14 August 2024, the Federal Trade Commission (FTC) adopted the Rule on the Use of Consumer Reviews and Testimonials, which prohibits certain unfair or deceptive acts or practices involving consumer reviews or testimonials. Under the new rule, businesses are prohibited from using fake or false reviews, including those generated by artificial intelligence (AI) or written by individuals who did not actually use the business's products or services. The prohibition extends to creating, selling, or disseminating such reviews and testimonials, particularly when the business knew or should have known that they were false. The rule also addresses the issue of incentivised reviews by forbidding businesses from compensating or offering incentives for writing reviews that express a specific sentiment, whether positive or negative. Additionally, the rule places restrictions on insider reviews. It mandates that any review or testimonial from company insiders, including officers, managers, and employees, must clearly disclose their material connection to the business. It also prohibits the solicitation of reviews from immediate relatives or employees by officers or managers, as well as the dissemination of such reviews if the business was aware or should have been aware of the insider's connection. Furthermore, the rule prohibits review suppression. Businesses cannot use threats, intimidation, or false public accusations to prevent or remove negative reviews. Additionally, businesses are barred from misrepresenting the scope of reviews on their websites, particularly if negative reviews have been suppressed based on their content. Finally, the rule addresses the misuse of social media indicators, such as fake followers or views. It is unlawful to buy or sell these fake indicators if the buyer knew or should have known they were fraudulent and misrepresented one's social media influence for commercial purposes. The rule will enter into force 60 days following its publication in the Federal Register.