BY THE OPTIMIST DAILY EDITORIAL TEAM
Today, online shopping is the default for many of us, meaning we rely heavily on reviews when deciding on our purchases. But in this wild internet era, how can we trust that all the reviews we’re reading are legit? Luckily, the Federal Trade Commission’s (FTC) new rule banning phony online reviews went into effect in October, with penalties of up to $50,000 per infraction.
FTC Chair Lina Khan praised the rule as a critical move to prevent firms from deceiving customers with falsified evaluations, which can harm legitimate competitors. The guideline forbids writing fraudulent consumer reviews, purchasing or suppressing reviews, and utilizing bots to boost follower or view counts. With an estimated 30-40 percent of online reviews being dishonest, this new legislation seeks to eliminate deceptive activities and clean up the digital economy.
High penalties for writing fake reviews
The guideline states that businesses that engage in review manipulation will face fines of up to $51,744 per infringement. In addition to obvious fraudulent evaluations, the FTC prohibits firms from purchasing favorable or negative reviews and from burying legitimate negative feedback. Companies found to be spreading bogus influence through bots will also face consequences.
According to PIRG data, almost 90 percent of consumers base their purchasing decisions on internet evaluations, so the crackdown is critical for maintaining consumer trust. Khan emphasized the negative impact of bogus reviews: “They not only waste people’s time and money, but they also pollute the marketplace.”
Third-party platform exemption: a missed opportunity?
While the new rule has received widespread praise, some opponents believe it falls short by exempting third-party platforms such as Yelp, Amazon, and Google from direct accountability. Kathryn Dean, creator of Fake Review Watch, raised concerns that review hosting sites “do far too little to clean up the fraud” and bear a significant responsibility for the issue. She argues that the rule should make these platforms more accountable.
However, the FTC noted that its decision not to pursue review-hosting sites does not absolve them of duty, and platforms will continue to play an important role in fighting review fraud.
Yelp, Amazon, and Google welcome the move
Despite some criticism, platforms such as Yelp and Amazon have indicated support for the restriction. Aaron Schur, Yelp‘s general counsel, commented, “We believe the enforcement of this new rule will improve the review landscape for consumers and help level the playing field for businesses.” Similarly, Amazon emphasized its continuous efforts to combat review fraud, noting that it has already taken legal action against more than 150 individuals involved in fraudulent reviews.
Google also underlined its moderation systems, which will prevent over 170 million policy violations by 2023, with machine-learning algorithms ensuring tougher review standards.
Is the “Should Have Known” standard clear enough?
One point of controversy is the rule’s use of the “should have known” standard, which holds companies liable for propagating bogus reviews if they could reasonably be expected to know they were phony. Critics, such as Ryan Young of the Competitive Enterprise Institute, say that this phrase is extremely broad and readily weaponized against businesses. Young warned that the ambiguous language could have a “chilling effect” on user reviews, limiting legitimate input availability.
Despite these concerns, the FTC defended its language, claiming it strikes the proper balance between protecting consumers and requiring corporations to accept responsibility for misleading tactics.
Ensuring compliance and looking ahead
The new rule will have a big impact on businesses. Law firms such as Holland & Knight have recommended that businesses create and implement comprehensive review rules and ensure that third-party marketers and advertising partners follow the new regulations. While the FTC estimates the cost of compliance to be small for most organizations, it acknowledges that corporations who go above and beyond to assure compliance may face charges of up to $871.98 million nationwide in 2024.
In the long run, businesses may need to reconsider their online review tactics to ensure transparency and authenticity. Though the law lays more responsibility on marketers and businesses rather than review sites, it is an important step toward making the digital marketplace more trustworthy and equal.
