The Federal Trade Commission (FTC) announced a final rule that bans “fake reviews and testimonials by prohibiting their sale or purchase and allow the agency to seek civil penalties against knowing violators.” This includes reviews created using AI technology and other auto-generated tools for creating company reviews.
This FTC rule impacts traditional brick-and-mortar and online retailers in predictable ways–a business cannot write fake positive reviews for itself and fake negative reviews for competitors. The rule also prohibits a business from misrepresenting that a website or entity it controls provides independent reviews or opinions about a category of products or services that includes its own products or services.
The FTC rule further prohibits misleading “indicators” behind social media accounts. For example, a business or influencer can no longer lawfully boost their follower count or perceived online engagements through the use of bots or other artificial enhancements.
Notably the rule allows the FTC to seek civil penalties against violators. This allows the FTC to address violations in-house rather than seeking enforcement through the DOJ.
If you have questions about your corporate compliance obligations, contact our Corporate Practice group for a consultation.
