FTC Considers New Rules To Combat Phony Reviews

The Federal Trade Commission on Thursday voted 3-1 to begin the lengthy process of creating rules aimed at curbing fake online reviews.

“Fake and deceptive reviews and other endorsements have long been problematic, and we have no reason to believe the market will correct this problem on its own,” the agency says in an advance notice of proposed rulemaking.

“The sheer number of people engaged in fraudulent or deceptive reviews and endorsements makes them even more difficult to combat, especially given that such content is often created by individuals or small companies, some of whom are located abroad,” the advance notice continues.

The agency is seeking comments from the public on issues surrounding fake reviews, including how prevalent they are and whether they harm consumers or competition.

The FTC has attempted to crack down on phony online reviews and endorsements for more than a decade, but hasn't previously attempted to issue regulations. Instead, the agency has authored guidance, sent out warning letters and brought enforcement actions against various companies.

The FTC's first major move regarding online reviews came in 2009, when it said in guidance that people who post testimonials and endorsements should disclose any relationship with the company being reviewed.

The agency is currently in the process of updating that guidance.

The FTC has also brought cases alleging that companies engage in unfair and deceptive practices by using fake reviews in marketing, preventing consumers from leaving honest reviews, and suppressing bad reviews.

Notably, earlier this year the FTC obtained a $4.2 million settlement from Fashion Nova, which allegedly failed to post reviews with fewer than four stars. (Fashion Nova didn't admit to wrongdoing, and a spokesperson told MediaPost at the time that the company "never suppressed" reviews, and that any issues with them stemmed from the company's use of an outside vendor.)

Commissioner Christine Wilson dissented from the decision to begin a rulemaking process. She stated that she agrees fake reviews are unlawful, but doesn't think that rulemaking is the “best use of our scarce resources, particularly given the nature of the harm at issue here.”

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