Online reviews influence consumer decision-making, but when reviews are fake or deceptive, they can mislead consumers and distort markets. The final rule from the Federal Trade Commission (FTC) banning fake reviews and testimonials provides enforcement and civil penalties for the practice.
According to data from BrightLocal, 93 percent of consumers make purchasing decisions at least in part based on online reviews. Digital review integrity matters for regulators and businesses alike. The FTC has long prohibited deceptive advertising practices under Section 5 of the FTC Act; however, e-commerce and artificial intelligence have made detecting and prosecuting fake reviews a challenge. The new rule strengthens enforcement power by defining and banning deceptive review practices.
What the Rule Forbids
The FTC’s final rule targets categories of deceptive behavior, including:
- Fake reviews, endorsements, and testimonials: Reviews written by individuals without experience using the product or service, false representations of customer experiences, or AI-generated reviews.
- Paid or incentivized reviews expressing a particular sentiment: Any compensation or incentive provided in exchange for a positive or negative review, even if implied.
- Reviews by undisclosed company insiders: Reviews written by officers, managers, employees, agents, or their family members without full disclosure.
- Company-controlled review websites: Sites designed to appear independent that are controlled by the company being reviewed.
- Suppression of legitimate reviews: Using threats, intimidation, or false accusations to discourage or remove negative feedback.
- Buying or selling fake followers or reviews: Particularly on social media, where participants knew or should have known the reviews were fake.
Under existing laws, the FTC already regulates these practices; however, this rule gives courts explicit authority to impose civil penalties, an additional deterrent to violations.
The Role of Consumer Perception and Surveys in Enforcement
Disputes and cases arising under this rule may require consumer perception research. Whether a review or testimonial is deemed “material” to consumer decision-making may determine whether a plaintiff can recover for the alleged violation. When enforcement actions or private disputes occur, litigation surveys can provide evidence showing consumer reliance on false or misleading reviews.
Surveys can measure:
- How consumers interpret the authenticity of reviews and endorsements.
- Whether they relied on reviews when making a purchasing decision.
- Whether false reviews or reviews from undisclosed insiders altered their perceptions of a product’s quality, trustworthiness, or value.
Properly designed and executed consumer survey research can measure whether consumers relied on reviews to make decisions, and the resulting data can help regulators quantify the impact of deceptive review practices.
Reliable Evidence
When courts and regulators enforce this rule, the demand for defensible survey evidence may grow. Consumer surveys, including materiality surveys and false and misleading advertising surveys, that adhere to accepted legal and methodological standards can help determine whether a review or testimonial meaningfully influenced consumer behavior.
IMS Legal Strategies designs and conducts surveys used in false and deceptive advertising litigation to measure consumer perceptions, materiality, and responses to disputed claims. Our research supports advertisers involved in regulatory investigations, competitor challenges, and civil cases involving reviews, endorsements, and other advertising practices.
To learn more about how consumer survey research can strengthen your case in false advertising or testimonial disputes, contact IMS Legal Strategies.
