The FTC Says You Can’t Buy Clout Anymore
Bad news for companies, brands, and influencers buying and selling fake and misleading reviews.
by Yaseen al-Sheikh, More Perfect Union
The Federal Trade Commission voted this week to ban digital commerce companies and retail sites from using fake reviews and followers to promote their products, among other new regulations prohibiting misleading tactics used to artificially inflate influence.
The new rule, which won unanimous support from the five-member FTC, is set to go into effect in mid-October.
These new rules come at a time when the federal government is looking at ways to clean up the country’s digital information ecosystem. This ban in particular is intended to deter companies from soliciting or publishing reviews that are created by company insiders, people who haven't actually used the product in question, or with artificial intelligence.
“Our proposed rule on fake reviews shows that we’re using all available means to attack deceptive advertising in the digital age,” Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, said in a statement. “The rule would trigger civil penalties for violators and should help level the playing field for honest companies.”
The new rule also prohibits companies using intimidation to get a negative review deleted, and bans companies and organizations from “providing compensation or other incentives conditioned on the writing of consumer reviews expressing a particular sentiment, either positive or negative.”
In 2023, for example, the New York Attorney General fined an orthopedic doctor in Manhattan $100,000 for soliciting friends and even paying contractors to write fake reviews on sites like Yelp and ZocDoc, while illegally suppressing negative reviews.
Studies have shown that anywhere between a quarter and nearly a half of influencers buy fake followers or in other ways inflate their social media presence. This has resulted in a niche industry of pay-to-win websites that provide users with the tools to get ahead of their competition. These tools are especially prevalent in video making and streaming, where viewership and follower counts are central to the eligibility requirements for paid creators on platforms like TikTok and Twitch.
By impeding their use, content creators who don’t have a financial advantage from the outset can navigate a more egalitarian landscape.
“Fake reviews and testimonials have polluted the marketplace,” FTC senior attorney Michael Atleson wrote in a blog post this week. “They harm the many consumers relying on them to pick products and providers, subverting people’s ability to make informed decisions. They also hurt competitors who work hard to comply with the law.”
In addition to addressing fake reviews, the FTC’s rule would see a crackdown on fake follower, like, and reply counts employed by some social media influencers to manipulate algorithms in their favor to benefit themselves financially. The rule prohibits companies and individuals alike from both buying and selling fake indicators of influence, such as likes, reposts, replies, views, or followers.
While fake reviews and misrepresenting your digital profile are already illegal, there has been no viable enforcement mechanism until now. The new FTC rule would allow regulators to fine companies up to a maximum of $51,745 per violation, which would result in meaningful financial consequences for websites that see millions of reviews on their domain published each year and for platforms that try to sell fake followers and likes to influencers.
Fake reviews have caused consternation as well at companies like Alphabet (the parent company of Google) and Amazon, both of which have been the subject of antitrust lawsuits by the Biden administration.
In 2022, Amazon sued over 10,500 Facebook groups and their administrators for allegedly coordinating the sale of fake reviews on certain products; the company subsequently blocked and deleted over 250 million suspicious or fake reviews in 2023 alone, while Google deleted at least 170 million fake reviews in 2023.
And with the rise of tools like ChatGPT, the rate at which fake reviews are being made has only rapidly increased. Although the rule does not go into detail on the role of generative AI, the Federal Trade Commission has made it clear in subsequent publications that the rules do apply to any fake reviews produced by such tools.
“To paraphrase ourselves, there’s no AI defense to the regulations on the books,” Atleson wrote.
How was this ever ok?