Key Point: The FTC recently announces a new rule to help it combat deceptive creation, solicitation and sharing of customer reviews and testimonials.
Prudent consumers are encouraged to “check the reviews” before purchasing a product or hiring a particular business to perform a service. However, increasing use of influencer testimonials and review purchase incentives has made it harder for consumers to trust the information found in reviews. On August 14, 2024, the Federal Trade Commission (“FTC”) issued a new final rule aimed at eliminating deceptive review practices, evidencing its continued crusade against consumer misinformation and deception. Ultimately the rule boils down to two marketing “golden rule” – do not create, or cause the creation of, reviews and testimonials that can deceive consumers and disclose, disclose, disclose.
The new rule explicitly prohibits the following:
- Writing, selling or buying fake or false consumer reviews or testimonials
Businesses should not write, sell, or otherwise share consumer reviews or testimonials that:
- Were authored by someone who does not exist,
- Were authored by someone who does not have first-hand experience with the business or its products/services discussed in the review, or
- Misrepresent the reviewer’s experience with the business or its products/services.
Further, business should not purchase customer reviews or testimonials that it knows or should have known were misrepresentative of the customer’s experience. To be clear, businesses can solicit reviews from past customers, or host reviews on the business’s website, but those reviews must be reflective of customers’ experience with the product or service. Further, the FTC has made it very clear that retailers or other independent companies that share customer reviews/testimonials are not liable for violations of the rule unless the retailer is otherwise prohibited from displaying the violative reviews/testimonials on its own website.
- Buying positive or negative reviews
Unsurprisingly, businesses are prohibited from making compensation or an incentive contingent on reviewers posting either positive or negative reviews. For example, this would prohibit offers of “$50 for a five-star review” as well as “$50 for telling everyone how much you love our product.” Offering incentives in exchange for reviews are permitted, except the marketer must it clear that the incentive is for an unbiased and honest review of the business’ product or service, rather than implying that the review must be positive in order to receive the incentive.
- Failing to disclose insider reviews or testimonials
A business’ officers, managers or other representatives (including immediate family members) should not write reviews or testimonials about the business or its products/services without a clear and conspicuous disclosure of their relationship with the business. When soliciting reviews from these sources, make sure to provide clear instructions to include a disclosure at the top of the review, and confirm those disclosures appear on the review once it is posted. If the disclosure is not present or inadequate, the review should be amended to include the disclosure, or removed if it cannot be amended. While this prohibition technically only applies to reviews where the undisclosed relationship is material to other consumers, it can be difficult to determine what is material and immaterial, so best practice is to require and include the disclosure every time.
- Deceptively claiming that company-controlled review websites are independent
Consumers deserve to know whether purported “independent review” sites are truly independently-operated or if the site is affiliated with a specific entity. It is misrepresentative, for example, for a major makeup retailer to own and operate www.BestMakeupProducts.com, and (unsurprisingly) list their products as the best in the business without informing consumers that the review website is owned by the retailer. If your business operates or controls a website or organization that provides independent reviews or opinions about a category of businesses, products, services, it must clearly disclose its relationship with that website or entity.
- Illegally suppressing negative reviews
Negative reviews are to be treated just like every other review. Businesses cannot make legal threats, physical threats, intimidation tactics or public knowingly false accusations to prevent the posting of a negative review or to encourage the alteration of a negative review if those threats are not warranted by the existing law or if there is no evidence to support the threat of legal action. Further, if negative reviews are suppressed based on rating or negative sentiment, then the portion of the website that displays the positive reviews cannot state or imply that it represents most or all submitted reviews.
- Selling or buying fake social media indicators
Businesses should not purchase or sell fake social media followers or views. This includes followers or views generated by bots, hijacked accounts, or that otherwise do not reflect a real individual and/or real thoughts or impressions. This applies to companies that knew or should have known that the followers or views were fake, or where a business misrepresents the number of followers or views for a commercial purpose.
Interestingly, the FTC also made clear in its announcement of the rule that while it does not specifically mention generative AI, the use of generative AI to produce deceptive content does not shield the company from liability under the new rule. We anticipate that the FTC will be closely watching the use of generative AI and its impact on marketing so there may be more to come from the FTC in the future on that topic.
Husch Blackwell has experience working with businesses on advertising, promotions and marketing matters, including the review of current policies or promotions, or the creation of new policies surrounding the solicitation, use and sharing of customer reviews or testimonials. If your business has questions regarding the impact of this rule on your review and testimonial practices, contact Tara Ficken or your Husch Blackwell attorney to learn more.