Dive Brief:
- The Federal Trade Commission's rule banning the sale or purchase of fake reviews went into effect Monday, banning false or misleading reviews from those without direct experience with a product or from people who do not exist.
- The rule was finalized in August and went into effect 60 days after publication to the Federal Register. It prohibits businesses from purchasing or incentivizing reviews or testimonials as well as the suppression of negative reviews.
- The rule allows the FTC to seek civil penalties from knowing offenders with fines as high as $51,744 per violation.
Dive Insight:
The FTC rule is meant to protect consumers by giving them more confidence in their shopping and level the playing field for honest businesses.
“By strengthening the FTC’s toolkit to fight deceptive advertising, the final rule will protect Americans from getting cheated, put businesses that unlawfully game the system on notice, and promote markets that are fair, honest, and competitive,” FTC Chair Lina Khan said in a prepared statement in August.
Many consumers trust reviews to help them make a purchase. A recent survey from Reputation found that consumers look to reviews over any other source — including friends and family — when shopping.
But that trust is starting to wane as fake reviews proliferate. Reputation found that 72% of consumers thought reviews were mostly trustworthy but were skeptical of some. One in 5 were either a little or very skeptical of online reviews.
Amazon, the Better Business Bureau and Trustpilot have taken companies that sell or purchase fake reviews to court in an effort to dissuade their use.
“It is not OK to pick and choose who you decide to collect reviews from,” said Allyse Slocum, VP of product and audience marketing at Trustpilot.
Slocum encourages companies to listen to a wide breadth of customer feedback to understand pain points and areas for improvement.
“For businesses, the idea of exposing themselves to customer feedback can feel very daunting because of that element of ‘What if? What if I get negative reviews?’ But no one is perfect, and we can't expect businesses to be perfect either,” Slocum said.
Slocum said consumers actually prefer an imperfect business that is working to meet their needs or engaging with them. Data from Reputation backs that up: 85% of consumers say that companies replying to negative reviews is an important factor in their purchase experience.
