The Federal Trade Commission voted unanimously on Wednesday to ban marketers from using fake reviewsakin to those generated using AI technology and other misleading practices to advertise their services.
All five FTC Commissioners voted to adopt the ultimate rule, which shall be effective 60 days after its publication within the Federal Registerthe official catalogue of regulations and announcements of the Federal Government.
Normally Rules shall be published This means consumers can expect the FTC's ban on fake reviews to enter effect in mid-October.
“Fake reviews not only waste people's time and money, they also pollute the market and put honest competitors out of business,” FTC Chair Lina Khan said in an announcement.
In addition to banning reviews from being written by humans, the FTC also prohibits firms from paying for positive or negative reviews to falsely promote or disparage a product. It also prohibits marketers from exaggerating their very own influence, akin to by paying bots to extend their follower count.
Violations of the rule could end in fines for every violation, in accordance with the rule. This signifies that for an e-commerce site with a whole lot of hundreds of reviews, the penalties for fake or manipulated reviews can quickly add up.
With the rise of e-commerce, influencer marketing and generative AI, increasingly more advertisers are turning to automated chatbots like ChatGPT to quickly generate user reviews for products sold online.
The result: Consumers sometimes buy items based on false promoting or misleading guarantees.
Fake reviews are already illegal and a few e-commerce firms have taken steps to crack down on this deceptive marketing practice.
Amazon, for instance, sued greater than 10,000 Facebook group administrators in July 2022 for allegedly distributing fake reviews.
Amazon didn’t immediately reply to CNBC's request for comment on the FTC's recent rule.
Some of the most important online review sites support the brand new rule.
“Although Yelp's policies have long prohibited the practices described in the FTC's final rule, we believe that enforcing this new rule will improve the review landscape for consumers and help level the playing field for businesses,” Aaron Schur, general counsel at major online review platform Yelp, said in an announcement to CNBC.
Under the brand new rules, firms which will have been self-regulating prior to now are actually subject to stricter government supervision.
Rather than pursuing individual cases through the Department of Justice, this rule will streamline and strengthen the FTC's ability to implement the ban internally.
The announcement got here on the identical day because the White House's first-ever Creator Economy Conference, where Biden administration officials hosted 100 online influencers and digital content professionals to listen to their concerns in regards to the industry.
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