FTC Bans Fake Reviews, Adds New Penalties

The Federal Trade Commission (FTC) has unanimously approved a new rule banning fake online reviews and deceptive practices, with penalties for violations reaching up to $51,744 per infraction. Effective 60 days after publication in the Federal Register, the rule prohibits businesses from generating, buying, or selling phony reviews, including those created by AI. It also bans rewarding individuals for positive reviews, suppressing negative reviews through intimidation, and buying fake social media followers. Companies must disclose any connections between reviewers and the businesses being reviewed, including relationships with employees and relatives. FTC Chair Lina Khan emphasized that the rule aims to protect consumers from deceptive advertising and ensure a fair marketplace. This move follows significant public feedback and addresses concerns about the increasing prevalence of fake reviews, particularly those enabled by advanced AI tools.