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July 3, 2023 : The Federal Trade Commission (FTC) has taken a significant step to tackle review fraud by proposing a new rule banning fake online reviews. The proposed rule aims to crack down on companies involved in purchasing or selling fake reviews, suppression of negative reviews, and the practice of “review hijacking,” which entails repurposing positive reviews from one item to boost other listings. By prohibiting company executives or insiders from leaving undisclosed reviews of their products or services, the FTC seeks to ensure transparency.
Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, believes that the proposed rule if enacted, would impose civil penalties on violators and create a fairer playing field for honest companies. Fake reviews and review abuse have been ongoing challenges for online platforms such as Amazon, Google, and Yelp. Unscrupulous individuals often employ fake reviews to manipulate search results and increase sales. Some companies even pay users to leave negative reviews on rival products, a tactic known as “review sabotage.”
As the prevalence of review fraud continues to grow, a clandestine industry of online businesses has emerged, offering fake reviews for as little as a few dollars each. These businesses advertise their services on websites, invite-only Facebook groups, and Telegram chats. Amazon, which has faced difficulties in combating fake reviews on its third-party marketplace, has taken legal action against fake review brokers and administrators of Facebook groups. The company utilizes a combination of human moderators and machine-learning tools to detect suspicious activities on its platform.
The FTC has been increasingly vigilant in its efforts to combat fake reviews, considering them deceptive to consumers seeking genuine feedback and harmful to honest businesses. In February, the agency initiated its first case against review hijacking, imposing a fine on supplement maker Bountiful Co. for using the tactic to boost its Amazon listings. Over the years, the FTC has filed several cases against companies utilizing fake reviews to sell products online, preventing users from leaving negative reviews.
The proposed rule is not immediately effective. There will be a 60-day public comment period, during which the FTC will evaluate the comments received. Following this period, the agency will vote on a final version of the proposal. With the emergence of generative artificial intelligence, the FTC acknowledges the potential for bad actors to employ AI to produce fake reviews more easily. This poses a new challenge that needs to be addressed to maintain the integrity of online reviews.
