The Federal Trade Commission (FTC) issued a new rule Wednesday to crack down on companies that post fake reviews or beef up their social media following with bots.

Going forward, businesses cannot post testimonials or reviews generated by artificial intelligence or “someone who does not exist,” said the FTC. The new rule—approved unanimously by FTC commissioners—also bans reviews by people who have not actually used the product or service or who misrepresent their experience with it.

Companies are also barred from buying fake reviews—whether positive for themselves or negative for competitors. And they cannot solicit consumer reviews by offering compensation or rewards, unless the review’s conditional nature is clearly stated.

With this ruling, the FTC also prohibits companies or individuals from knowingly selling or buying “fake indicators of social media influence”—such as followers or views generated by bots or hijacked accounts—to use for a commercial purpose.

The new guidelines bar businesses from posting reviews written by employees if they fail to disclose their connection to the business, and from disseminating testimonials a business knows came from insiders. The FTC has also put limits on soliciting reviews from relatives or associated agents.

Furthermore, a business cannot misrepresent that a website it controls provides independent reviews about either its or competitors’ products. Companies are additionally prohibited from making “unfounded or groundless legal threats, physical threats, intimidation, or certain false public accusations” to prevent or remove a negative consumer review.

Jewelers Vigilance Committee CEO Sara Yood tells JCK: “I’m thrilled that the FTC has addressed these issues, especially including banning AI-generated fake reviews and those written by company insiders that fail to disclose the reviewer’s connection to the business. Ensuring that consumers have access to real, unsolicited information about products is essential to the level playing field for which JVC continuously advocates, and having a final rule will strengthen the FTC’s ability to pursue enforcement against fake reviews.”

“Fake reviews not only waste people’s time and money, but also pollute the marketplace and divert business away from honest competitors,” said FTC chair Lina M. Khan in a statement.

The rule will become effective 60 days after its publication in the Federal Register.

(Photo: Getty Images)

Follow JCK on Instagram: @jckmagazine
Follow JCK on Twitter: @jckmagazine
Follow JCK on Facebook: @jckmagazine