New FTC rules against fake reviews and followers

The FTC recently announced new rules to enhance deterrence and strengthen enforcement actions against fake reviews and followers. These rules, which go into effect in October, have significant implications for all brands—especially those partnering with influencers, where compliance becomes more challenging.

What the rules prohibit:

1. Fake or false consumer reviews, testimonials, & celebrity testimonials

   Prohibits reviews and testimonials by someone who does not exist, such as AI-generated fake reviews or by those who did not have actual experience with the business or its products or services. It also prohibits businesses from creating or selling such reviews or testimonials, buying them, procuring them from company insiders, or disseminating such testimonials.

2. Buying positive or negative reviews

   Prohibits businesses from providing compensation or other incentives conditioned on writing consumer reviews expressing a particular sentiment - positive or negative.

3. Insider reviews and consumer testimonials

   Prohibits certain reviews and testimonials written by company insiders (officer, manager, employee, etc.) that fail to clearly show the giver’s connection to the business. It also imposes requirements when officers or managers solicit consumer reviews from their own immediate relatives or from employees or agents.

4. Company-controlled review websites

   Prohibits a business from misrepresenting that a website or entity it controls provides independent reviews or opinions about a category of products or services, including its own products or services.

5. Review suppression

   Prohibits a business from using unfounded or groundless legal threats, physical threats, intimidation, or certain false public accusations to prevent or remove a negative consumer review.

6. Misuse of fake social media indicators

   Prohibits anyone from selling or buying fake indicators of social media influence, such as followers or views generated by a bot or hijacked account.

You can find more detailed information on the FTC rules outlined above here. If you're feeling brave and ready to dive into the full 163-page ruling, you can access it here. Just a heads-up: it’s dense reading and may cause drowsiness or sudden bouts of irritability.

Brands should pay attention

The FTC is getting serious, and we’re likely to see increased scrutiny and potential penalties, including hefty fines, shortly after the new rules go into effect.

While every brand should know these new regulations, those partnering with influencers must be especially vigilant. Brands involved in influencer marketing are responsible for ensuring their partners comply with FTC guidelines, such as those related to fake followers or artificially inflated views. They are also responsible for ensuring that influencers provide accurate and truthful reviews of their products. This includes:

• Disclosing sponsored content: Influencers must clearly disclose when they are being paid or compensated to promote a product.

• Avoiding deceptive practices: Influencers should not make false or misleading claims about a product’s benefits or effectiveness. For instance, they should not exaggerate the results of using a product or make claims not supported by scientific evidence.

• Providing honest feedback: Influencers should give genuine and unbiased opinions on products they have used, even if they are not entirely positive.

Brands must be prepared to invest in compliance measures and influencer vetting. This involves verifying the authenticity of their follower base and engagement metrics and regularly monitoring influencer content to ensure ongoing compliance. The increased oversight may lead to higher costs, but it's a necessary step to avoid potential penalties.

To further mitigate risks, brands should include compliance clauses in their contracts with influencers, explicitly requiring adherence to FTC rules. Additionally, brands should consider proactively educating partners about these guidelines and provide clear, actionable instructions to ensure compliance.

For more information, the FTC endorsement guides offer detailed requirements for endorsements and testimonials in advertising, focusing on how influencers and brands must disclose relationships and avoid deceptive practices. Additionally, the Disclosures 101 for social media influencers page provides useful tips on when and how to make necessary disclosures, which brands can share with their influencers.

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