FTC Says It’s Cracking Down on Fake Reviews Online

fake online reviews

The Federal Trade Commission (FTC) says it is clamping down on fake online reviews. The FTC, which is committed to protecting consumers and competition by preventing anticompetitive, deceptive and unfair business practices, says that if businesses deceive consumers, they will be ready to hold them responsible.

FTC Cracking Down on Fake Online Reviews

The independent US agency is using its Penalty Offense Authority to remind advertisers of the law and to deter them from breaking it.

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Social media and its prolific rise has obscured the distinction between authentic content and advertising. Consequently, deceptive and dishonest endorsements are commonplace online, with fake reviews dominating the web.

Fake Reviews Can Devastate Small Businesses

For small businesses, fake online reviews can have a devastating impact. A fake negative review can damage a business’s reputation, while a fake positive review can unfairly impact competition. With reviews now a ubiquitous part of online shopping, the need to eliminate fake online reviews has never been so important.

As Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, comments: “Fake reviews and other forms of deceptive endorsements cheat consumers and undercut honest businesses,” adding:

“Advertisers will pay a price if they engage in these deceptive practices.”

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Notice of Penalty Offenses

In a bid to curtail the practice of fake online reviews, the FTC is sending out Notice of Penalty Offenses. The Notice of Penalty Offenses enables the FTC to seek penalties against a company that it knows has been unlawful in a previous FTC administrative order, other than a consent order.

The notice warns a business of unlawful practices relating to the use of endorsements and testimonials. The notice informs a business that it could incur significant civil penalties – up to $43,792 per violation – if they use dishonest endorsement.

The official letter lists the practices that the FCA determine to be deceptive or unfair in prior administrative cases. These practices include the false claiming of an endorsement by a third party, mispresenting whether an endorser is an actual, current or recent user, using an endorsement to make deceptive performance claims, failing to disclose an unexpected material connection with an endorser, and misrepresenting that the experience of endorsers represents consumers’ typical or ordinary experience.

FTC’s Resource Guide

The FTC has created a resource guide for businesses to help them maintain lawful practices when using endorsements to advertise their products. The guide lists important information about endorsements, social media contests, online review programs, employee endorsements, affiliate or network marketing, intermediaries, using testimonials, and more.

More than 700 companies have been in receipt of a Notice of Penalty Offenses by the FCA. Recipients range from large companies, leading retailers, top advertisers, top consumer product companies and major advertising agencies.

A list of the businesses receiving the Notice from the FTC is available on the agency’s website.

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Gabrielle Pickard-Whitehead Gabrielle Pickard-Whitehead is a professional freelance writer and journalist based in the United Kingdom. Since 2006, Gabrielle has been writing articles, blogs and news pieces for a diverse range of publications and sites. You can read "Gabrielle’s blog here.".

2 Reactions
  1. I hope they can clean it up more. Unfortunately it’s a big mess, so it’s going to take time and effort.

  2. Good idea! FTC should also consider (* I don’t know if this is under their jurisdiction) to combat the bots who literally “eats” a lot of $$$ from advertising budget (fake clicks, fake impressions, etc). How to do this? By fine the social media companies with fair amount of $$ (fair in comparison with their budgets, not with the small businesses budgets). In this way, those social media companies will invest more in protecting their customers.

    A small tip for the business owners who received fake negative reviews:
    Be polite! Try to respond to the fake review (even if you are 100% sure it is fake) and ask the OP if there is any way to solve the “situation”, in order change his/her view about your company/service. Kill it with kindness! The bot/fake-reviewer will never respond, and if it will, it will not know how to justify the negative fake reviwe. In this way, it will show to the potential customers that it was never a client of your business. Also, the polite response will show that you are a real person who put high value on his/her business.

    Something like:
    “Hello John Doe, We are sorry to hear about your grievance. Unfortunately, we just checked on our order log and we couldn’t find your purchase, or you as a customer of ours. If you could get back to us with more details, so that we can try to figure out what’s going on and to quickly solve your issue, that would be great!

    Many thanks,
    Website Seller”

    There is another case when the client simply lie about the quality of your service (it happens in web design, it may happen in any other industry). Example: He/she wants more free work from you, etc, and if you’re not agree with that, bang!: You received a bad review. Even in this case, don’t forget: Be polite! In a few words, explain the Terms of Service (if you don’t have a page like this on your site, create it now) and why you don’t work for free. Of course, if there are small extra-tasks to do (and, in this way to avoid a bad review), do it (it’s up to you).