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FTC seeks to ban fake reviews with new proposed rule

FTC Chair Lina Khan speaks during a Senate Commerce, Science and Transportation Committee confirmation hearing in Washington, D.C., April 21, 2021.

Graeme Jennings | Bloomberg | Getty Images

The Federal Trade Commission on Friday proposed a new rule that seeks to ban fake online reviews, marking its most aggressive step yet to thwart review fraud.

The proposed rule would prohibit companies from buying or selling fake reviews and suppressing negative reviews, as well as “review hijacking,” which involves repurposing positive reviews from one item for use on other listings, and can make new or questionable products appear trustworthy. It also bars company executives or insiders from leaving reviews of their products or services without disclosing their relationships.

“The rule would trigger civil penalties for violators and should help level the playing field for honest companies,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection, in a statement.

Fake reviews and review abuse have been a persistent issue for online platforms such as Amazon, Google and Yelp. Bad actors often rely on fake reviews to boost their products in search results and drive more sales. In some cases, companies offer to pay users to leave negative reviews on a competitor’s product, a tactic called “review sabotage.”

As review fraud has become more prevalent, a shadowy economy of online businesses has sprung up promising to supply companies with fake reviews, often for as little as a few bucks apiece. Some of these businesses advertise their services through their website, while others set up invite-only Facebook groups and Telegram chats.

Amazon, which has struggled to combat fake reviews on its third-party marketplace, has increasingly gone after fake review brokers and Facebook group administrators in court. It also uses a combination of human moderators and machine-learning tools to try to detect suspicious activity on its site.

The FTC has increasingly cracked down on fake reviews as they “deceive consumers looking for real feedback on a product or service and undercut honest businesses,” the agency said. In February, the FTC brought its first case against review hijacking when it fined supplement maker Bountiful Co., which makes the popular vitamin brand Nature’s Bounty, for using the tactic to boost its Amazon listings.

The agency has filed several other cases in recent years against companies that used fake reviews to sell products online, and blocked their users from leaving negative reviews.

In its announcement Friday, the FTC acknowledged that the widespread emergence of generative artificial intelligence will likely make it easier for bad actors to write fake reviews. CNBC previously reported that some people are already using AI chatbots to write reviews on Amazon.

The proposed rule does not take effect immediately. There is a 60-day public comment period, and then the agency may reevaluate the rule based on the comments it receives. After some time, the FTC will vote on a final version of its proposal.

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