FTC Finalizes New Rule on Fake Consumer Reviews and Testimonials

Richard Newman of the Hinch Newman firm reports that the Federal Trade Commission (FTC) finalized a rule imposing monetary penalties for fake consumer reviews and testimonials, impacting digital marketing, influencers, and compliance teams across various industries.

The rule formalizes the prohibition of deceptive practices, including purchasing and selling fake reviews, incentivizing biased reviews, and failing to disclose relationships between reviewers and businesses. It also addresses “insider” reviews—those posted by employees or agents without clear disclosures. 

The implications are profound for marketers and influencers: any incentivized review must be clearly disclosed, and businesses must ensure that any content they share is genuine, creating a shift towards more transparent marketing strategies.

The article suggests that compliance teams must act promptly to align their practices with the new regulations. This includes implementing robust monitoring systems to verify the authenticity of reviews, auditing marketing strategies, and developing training programs for employees about disclosure requirements. Violations of this rule can result in civil penalties of up to $51,744 per violation, increasing the stakes for non-compliance.

The FTC’s rule fosters fair competition and consumer protection, compelling businesses to adopt transparent marketing practices that accurately reflect consumer experiences. Companies leveraging consumer testimonials must consult legal experts to ensure compliance and avoid potential penalties, emphasizing the need for ethical practices in influencer collaborations and digital marketing campaigns.