FTC Targets Companies That Use Fake Online Reviews

As more marketing departments lean into generative artificial intelligence (AI), the Federal Trade Commission (FTC) has proposed a new rule that bans companies from using fake customer reviews and engaging in illicit endorsement practices.

The FTC’s proposed rule would prohibit buying positive or negative reviews, suppressing honest negative reviews and buying fake social media indicators such as likes, followers and views. It would also bar companies from writing reviews of their own products and services, among other illegitimate practices.

“Our proposed rule on fake reviews shows that we’re using all available means to attack deceptive advertising in the digital age,” says Samuel Levine, director of the FTC’s Bureau of Consumer Protection. “The rule would trigger civil penalties for violators and should help level the playing field for honest companies.”

FTC officials say such illicit practices deceive consumers looking for real feedback on a product or service and undercut honest businesses. They cited examples of deceptive practices involving consumer reviews and testimonials from its past cases. They also noted the emergence of generative AI, which makes it easier for bad actors to write fake reviews.

In the auto-glass industry, companies relying on word-of-mouth advertising are paying attention.

Coastal Carolina Autoglass is approaching its two-year anniversary, and owner Chris Sergent says he already gets “quite a bit of calls” from customers who choose his Pawleys Island, S.C.-based shop based on a positive online review. He has also observed companies taking the acquisition of positive reviews to an unethical extreme.

“There are companies out there that either try to gain customers by posting fake reviews for themselves, or they post fake reviews about other companies,” Sergent says. “I think there should be some type of repercussion for that kind of fraudulent activity. There’s no oversight when it comes to that, that I know of, and I think there should be.”

The FTC is now fielding comments on provisions in the proposed rule. After the agency reviews the comments, it will decide whether to take additional steps toward finalizing the rule.

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