Review platform Yelp is urging the Federal Trade Commission to consider fining anyone involved in creating or posting phony endorsements.
“Yelp recommends that the Commission consider adopting new civil penalties for businesses and individuals who author, arrange for or pay for deceptive reviews,” the company writes in comments filed late last week with the FTC.
The company said deceptive reviews “undermine Yelp’s usefulness to consumers,” adding that such reviews “are a problem that Yelp constantly fights.”
Yelp's comments come in response to the FTC's requests for input on potential new regulations surrounding fake reviews. That request, issued in October, marked the first step in what could be a years-long initiative to craft new rules.
The agency proposed addressing a host of practices -- including reviews by people who don't exist or who didn't use the product, reviews that marketers pay for, and reviews by business owners.
Yelp characterizes the practices flagged by the FTC as “deceptive,” and is urging the agency to focus on establishing penalties.*
The FTC has attempted to crack down on phony online reviews and endorsements for more than a decade, but hasn't previously attempted to craft regulations. Instead, the agency has issued guidance regarding what constitutes a deceptive practice, sent warnings, and brought enforcement actions.
The agency's first major move regarding online reviews came in 2009, when it recommended 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 also warned hundreds of companies in 2021 that they could face fines of more than $40,000 per violation over fake reviews. While the FTC typically lacks the power to fine first-time violators, the FTC Act contains a little-used provision that empowers the agency to seek civil penalties against companies that have “actual knowledge” they are engaging in unlawful practices.
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, last 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.)
*This article was updated to clarify that Yelp is urging the FTC to focus its rulemaking efforts on crafting civil penalties for the practices it flagged in its notice.