• October 4, 2023
  • By Leonard Klie, Editor, CRM magazine and SmartCustomerService.com

FTC Plans Crackdown on Fake Reviews, Influencers

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The U.S. Federal Trade Commission has proposed a rule that it says would help eliminate fake reviews and keep companies from suppressing negative reviews or paying for positive reviews meant to deceive consumers looking for real feedback on products or services.

The FTC said it has files full of deceptive practices involving consumer reviews and testimonials and said the time to act is now because generative artificial intelligence could make it even easier for bad actors to write fake reviews.

The proposed measures would prohibit the following:

  • Selling or obtaining fake consumer reviews and testimonials by someone who does not exist, who did not have experience with the product or service, or who misrepresented the experience. It also would prohibit businesses from procuring such reviews or disseminating them if it knew or should have known that they were fake.
  • Review hijacking, a process for using or repurposing consumer reviews written for one product so they appear to have been written for a substantially different product.
  • Buying positive or negative reviews.
  • Writing or disseminating insider reviews and consumer testimonials from company officers and managers without clearly disclosing their relationships.
  • Creating or controlling review websites that claim to provide independent opinions.
  • Using legal threats, intimidation, or false accusations to prevent or remove negative consumer reviews and misrepresenting that the reviews on its website represent all reviews submitted when negative reviews have been suppressed.
  • Selling fake indicators of social media influence, like fake followers or views. The proposed rule also would bar people from buying such indicators to misrepresent their importance for a commercial purpose.

“Our proposed rule on fake reviews shows that we’re using all available means to attack deceptive advertising in the digital age,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection, in a statement. “The rule would trigger civil penalties for violators and should help level the playing field for honest companies.”

Zarnaz Arlia, chief marketing officer at Emplifi, says the rule would be “critical to both consumers and brands.”

“Not only does it provide an added level of transparency within customer reviews and ratings, it also includes substantial financial penalties if a company purposely deceives shoppers via fraudulent reviews and ratings,” she says.

Arlia also calls the legislation “a definite step in the right direction when it comes to rebuilding trust in the online review ecosystem.”

“Today’s consumers are savvy. They know how to research products online and frequently rely on authentic customer ratings and reviews before deciding whether or not to buy a product,” she says, pointing to recent Emplifi research that found that more than 90 percent of consumers reported that customer ratings and reviews had the biggest impact on their purchasing decisions.

“Ratings and reviews only work if they are authentic. The significant uptick in fake reviews and suppression of negative reviews works against the brand long term,” she adds. “While the ruling may feel like more work for e-commerce and customer care teams, it sets brands up to succeed by ensuring their ratings and reviews are based on legitimate feedback from real-life customers.”

Arlia is not alone in her support of the rules changes. A study by Capterra found that 80 percent of marketers believe the updated guidelines will ultimately positively impact their ability to achieve social media marketing objectives.

Additionally, 93 percent of marketers told Capterra that they have witnessed misleading endorsement practices among competitors; nearly 60 percent have encountered the selling of fake social media followers or views to inflate social media engagement; and 57 percent have witnessed competitors selling or obtaining fake customer reviews.

Marketers say these notable updates by the FTC will have the most significant impact on their influencer marketing initiatives. Seventy-three percent believe that the updated guidelines will help consumers see influencer partnerships as more trustworthy and reliable.

“Influencer marketing has significantly changed in the last decade given the evolving nature of social media and endorsements,” said Meghan Bazaman, senior marketing analyst at Capterra, in a statement. “Businesses are under tighter scrutiny to maintain consumer trust, especially as they have become increasingly conscious of brand ethics. The FTC’s updated guidelines highlight the importance of maintaining transparency, which ultimately drives brand authenticity.”

Marketers are already taking steps to comply with the rules, such as updating their influencer partnership policies, increasing time monitoring or reviewing influencer content, and consulting legal experts or compliance specialists. Ninety-two percent of them say their companies will factor in the updated guidelines when planning influencer budgets, and 51 percent predict their companies will increase budget to accommodate the new disclosure rules.

Adjusting to new restrictions can be overwhelming, but prioritizing compliance will foster stronger influencer partnerships, Capterra concluded in its report. 

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