Finally, the FTC makes a sneaky online shopping tactic illegal

If you’ve ever read an online review for a product or service and thought, “It’s too good to be true,” you were probably right.

On average, about 30 percent to 40 percent of online reviews are fake, according to estimates from consumer advocacy groups.

Related: FTC warns companies to end ‘deceptive’ and ‘unfair’ practice.

But that’s about to change, as the age of fake online reviews is about to come to an abrupt end. The Federal Trade Commission has officially finalized a new rule, which will go into effect in October, that will ban fake online reviews in several different ways.

“Fake reviews not only waste people’s time and money, they also pollute the marketplace and take business away from honest competitors,” FTC Chairwoman Lina Khan said in a news release announcing the rule on Aug. 14.

What will the new rule do?

Fake reviews can be generated through multiple controversial practices, which will be discouraged by the new rule.

First, the rule will ban “reviews and testimonials” from people who don’t exist, which includes reviews that are generated by artificial intelligence, according to the press release. Also, reviews from people who have never experienced the product, business or service will also be prohibited.

Additionally, the rule will block companies from “offering compensation or other incentives” for positive or negative reviews. Insider reviews, such as those written by people who work for the company, will also be prohibited.

A woman shopping online using a credit card.

Companies will also no longer be allowed to use “unfounded legal threats, physical threats, intimidation or certain false public accusations” to prevent or remove a negative review from a consumer. They will also be prohibited from “misrepresenting” that a “website or entity” they control “offers independent reviews or opinions about a category of products or services,” including their own.

Finally, the intentional buying or selling of bots that generate fake followers or views for a social network account will also be prohibited under the new rule.

More retail:

• Sam’s Club customers threaten to end membership over new policy
• Tractor Supply has another boycott on its hands after a radical change
• Dior Pays an Amazingly Low Price to Produce a $2,780 Handbag

Violators of the FTC’s new rule will face civil penalties, according to the press release.

The FTC’s final version of the rule comes after it was first proposed in November 2022. The FTC’s move appears to be part of President Joe Biden’s latest efforts to “end corporate fraud,” which involves promoting competition and protecting consumers in the economy american

Online reviews can make or break a business, so it’s no surprise that some companies have resorted to deceptive tactics to maintain a five-star rating. According to a recent survey from CouponBirds, about 76% of consumers said they always check reviews before making an online purchase and about 93% said online reviews influenced their purchase decisions.

Related: Veteran fund manager picks favorite stocks for 2024