FTC Bans Fake Reviews and Testimonials
Michael Stanton | Published on 10/31/2024
We've all been down the research path, searching for the perfect piece of equipment that fits our budget, integrates well with our system, and delivers the sound we love. But it’s frustrating when nearly every review is positive or effusive—after all, no one wants to write a bad review. The new set of FTC rules aims to tackle false content, misleading reviews (such as those written by employees or agents of a business without proper disclosure), and deceptive practices (like positioning a website as “independent” when it's actually compensated for the review). The first two issues are essentially deceptive advertising, no different than buying a full-page ad and making it look like editorial content. That’s allowed, but it must be clearly disclosed as an advertisement.
Where things get murkier is in the "compensation" aspect, which can involve long-term loans, steep industry discounts, or access to future product releases—not to mention advertising dollars. So, is it time to discuss standardized disclosures for audio reviews? Would knowing the reviewer is fully transparent about their circumstances add authenticity to the review? In a hobby as subjective as audio (and a livelihood for some), can we create a framework that’s fair to manufacturers and delivers actionable, reliable reviews? What would that look like? Let’s explore the FTC’s new rules and commentary with these questions in mind.
As of October 21st, 2024 the FTC has put into effect six rules to protect consumers from fake reviews and testimonials, prohibit content providers from positioning themselves as “independent” when they are not and increase the overall transparency in the review process. These rules revolve around the relationship between businesses and reviewers as well as businesses and consumers. Ron Resnick of What’s Best Forum produced an insightful video that delves into the details of how these rules directly affect the audio industry with an emphasis on the grey areas of the rules and, more importantly, what was left out.
Four of the six rules are straight forward consumer protection acts designed to eliminate fraudulent advertising.
1) Fake or False Consumer reviews/testimonials and celebrity testimonials: The rule prohibits reviews/testimonials from people who do not exist (ie fake social media accounts or AI generated). It’s also prohibited to create, buy, sell or disseminate such testimonials. Definitely deceptive and prohibited.
2) Misuse of Fake Social Media Indicators: Simply put, a view from a bot is not the same as a view from a human and to sell it as such is definitely deceptive and prohibited.
3) Insider Reviews and Consumer Testimonials: The rule prohibits certain reviews and testimonials written by company insiders that fail to clearly and conspicuously disclose their connection to the business. It also prevents them from soliciting reviews from their friends and families. To portray a review as “independent” when it’s not is definitely deceptive and prohibited.
4) Websites: The rule prohibits a business form misrepresenting itself as an independent reviewer when it includes it’s own products in the review. Definitely deceptive and prohibited.
This is where it gets dicey…
5) Review Suppression: The final rule prohibits businesses from using unfounded or groundless legal threats, physical threats, intimidation or certain false public accusations to prevent the posting, publishing or force the removal of a negative consumer review. Reviewers are now protected from litigation for their honest and independent opinions which is fantastic but, as we all know, manufacturers do have other avenues that are well within their rights, such as withholding product for future reviews or pulling advertising dollars from websites and magazines to influence the tone of a review.
6) Buying Positive or Negative Reviews: Prohibits businesses from providing compensation or other incentives conditioned on the writing of consumer reviews expressing a particular sentiment, positive or negative. Ron Resnick has a really interesting take on this one. I refer you back to the video link above. He discusses this point in detail at 3:57.
We’re all against fraud, deception and being lied to. The first four rules above are designed to prevent businesses from taking liberties with how they present and position their products in the marketplace. Rule five provides much needed legal protection for reviewers. Summed up differently businesses cannot threaten reviewers but they do have other means of influence at their disposal. To oversimplify, Rule six requires what is essentially a PR piece to clearly disclose itself as such.
As is the case with many things in life, the devil is in the details.