In an effort to combat the widespread issue of fake and misleading online reviews, the United States Federal Trade Commission (FTC) has announced the implementation of a new rule aimed at tackling various forms of deception in the review system. The decision was reached unanimously in a 5-0 vote, signaling the urgency to address the growing concerns surrounding the trustworthiness of online reviews.

The new rule is set to be enforced 60 days after its publication in the Federal Register, providing merchants, particularly those on platforms like Amazon, with a 60-day window to comply with the regulations. The FTC's initiative aims to restore the integrity of the online review system, making it easier for consumers to find reliable and trustworthy information about products and services.

The rise of generative AI has made it increasingly simple for bad actors to create fraudulent reviews, exacerbating the problem. In response to this growing concern, the FTC has proposed the new rule to address the issue. The initial proposal was made in June 2023, following an advanced notice of proposed rulemaking issued in November 2022.

Under the new rule, businesses are strictly prohibited from utilizing fake or disingenuous reviews, including those generated by AI or written by individuals without actual experience with the product. Additionally, companies are barred from buying or selling reviews, whether they are positive or negative.

To ensure transparency, company insiders writing reviews must clearly disclose their connection to the business. Officers or managers are explicitly forbidden from providing testimonials and cannot solicit reviews from their employees' relatives. Furthermore, businesses are not allowed to control review websites that claim to be independent but are actually affiliated with the company.

To prevent intimidation tactics, the new rule also prohibits the use of legal threats, physical threats, or any form of intimidation to forcefully delete or prevent negative reviews. Businesses are also restricted from misrepresenting the review portion of their website as comprising all or most of the reviews when suppressing negative feedback.

In addition to these measures, the FTC's rule also addresses the issue of fraudulent engagement on social media platforms. Companies are now barred from selling or buying fake engagement, such as social media followers, likes, or views obtained through bots or hacked accounts.

Violations of the new rule could result in significant penalties, with the maximum civil penalty set at $51,744 per violation. However, the courts have the discretion to impose lower penalties based on the specifics of each case.

"Ultimately, courts will also decide how to calculate the number of violations in a given case," the FTC stated in the finalized rule.

With the implementation of this new rule, the FTC aims to restore trust in the online review system, ensuring consumers have access to reliable information when making purchasing decisions. The 60-day grace period allows businesses to adapt to the new regulations and maintain compliance moving forward.