A bad review can make or break a business, but paying for fake AI reviews isn’t the solution — in fact, a new federal rule makes it a costly mistake.
The Federal Trade Commission (FTC) banned buying or selling fake reviews (AI-generated or human-written) in a final rule published Wednesday. The rule, which the FTC unanimously approved, stops anyone who doesn’t have experience with a product from writing a review about it. It takes effect in October and follows nearly two years of public comments, clarifications, and adjustments.
According to the new rule, businesses can’t buy or sell positive or negative reviews, and they can’t have employees write reviews either. Suppressing negative reviews by threatening or accusing the customers who wrote them is also banned.
Related: The FTC Is Banning Noncompetes — Here’s What Happens If You’re Currently Bound to One
The rule also cracks down on other ways businesses could falsely inflate their reputations, like social media follower count. A business can no longer buy or sell followers or views from AI bots or hacked accounts to boost credibility.
The FTC has the power to seek a maximum penalty of about $51,744 for each part of the rule a business violates.
“Fake reviews not only waste people’s time and money, but also pollute the marketplace and divert business away from honest competitors,” FTC Chair Lina M. Khan said in a statement. “By strengthening the FTC’s toolkit to fight deceptive advertising, the final rule will protect Americans from getting cheated, put businesses that unlawfully game the system on notice, and promote markets that are fair, honest, and competitive.”
FTC Chair Lina Khan. Michael M. Santiago/Getty Images
The rule follows an August 2022 FTC case against Roomster, a rental listing site that allegedly paid for tens of thousands of fake reviews. The site gathered tens of millions of dollars from low-income renters and students paying for access to listings they thought were verified and available — but were actually fake.
Fake reviews were also at the heart of another complaint the FTC filed against retailer Fashion Nova in January 2022. The FTC alleged that Fashion Nova did not post reviews with ratings of fewer than four out of five stars. Fashion Nova had to pay $4.2 million for harm caused to customers and was ordered to stop suppressing unfavorable reviews.
Khan stated that because of the new rule finalized Wednesday, the FTC will soon be “levying penalties on lawbreakers and returning money to those harmed” by fake reviews.
Related: Jeff Bezos and Amazon Execs Used An Encrypted Messaging App to Talk About ‘Sensitive Business Matters,’ FTC Alleges
