On August 14, the FTC announced a final rule that, according to the FTC, is intended to “combat fake reviews and testimonials.”  The rule will go into effect on October 21, 2024.  This final rule is the culmination of the FTC’s issuance of an advance notice of proposed rulemaking (ANPRM) in November 2022 and notice of proposed rulemaking (NPRM) in June 2023.  We previously analyzed the draft rule presented in the NPRM. 

In response to public comments, the FTC made several substantive changes in the final rule.  Many of these changes narrow the rule in helpful ways for businesses concerned about the breadth of the proposed rule, although a few changes arguably expand the rule.  We have outlined some of the major differences between the draft and final rules below:

  • Fake or False Consumer Reviews, Consumer Testimonials, or Celebrity Testimonials.  This provision of the final rule largely retains the draft rule’s prohibitions on writing, creating, selling, purchasing, disseminating, or procuring so-called “fake or false” reviews and testimonials, but clarifies that they are limited to reviews/testimonials that “materially misrepresent” that the reviewer/testimonialist exists, the reviewer/testimonialist has experience with the product, service, or business reviewed, or that the reviewer’s/testimonialist’s review is based on their experience with the product, service, or business reviewed.  Additionally, the final rule introduces two new exceptions to this provision: prohibitions on “purchasing,” “disseminating,” and “procuring” “fake or false” reviews/testimonials do not apply to “(1) reviews or testimonials that resulted from a business making generalized solicitations to purchasers to post reviews or testimonials about their experiences with the product, service, or business; or (2) reviews that appear on a website or platform as a result of the business merely engaging in consumer review hosting.”  The FTC further explained that this provision “will not prohibit an online business that hosts reviews from prompting the submission of reviews from the general public or from organizing, moderating, or aggregating them.”  The final rule also narrows the provision on “procuring” reviews by revising it to only apply to the procuring of reviews from company insiders.
  • Consumer Review Repurposing.  The proposed rule had sought to prohibit the use or repurposing of consumer reviews written for one product so that they appeared to have been written for a substantially different product, so-called “review hijacking.”  This section was eliminated from the final rule. 
  • Buying Positive or Negative Consumer Reviews.  The final rule retains the draft rule’s prohibition on providing compensation or other incentives in exchange for or conditioned on writing a review with a specific sentiment, and expanded the scope of this provision by specifying that it applies to both express and implied conditions.  The FTC’s commentary accompanying the rule indicates that statements like, “Tell us how much you loved your visit to John’s Steakhouse and get a $5 coupon” would violate this provision.
  • Insider Consumer Reviews and Consumer Testimonials.  The FTC narrowed the scope of this provision, which deals with writing, disseminating, or soliciting reviews written by a business’s own employees or immediate relatives, so that the prohibitions apply only when the connection to a so-called “insider” is “material.”  The final rule also introduces a new exception to this provision, clarifying that businesses will not be held liable for disseminating insider testimonials or soliciting insider reviews if they merely make a “generalized solicitation to purchasers” to post about their experiences.
  • Company-Controlled Review Websites or Entities.  This provision prohibits a business from materially misrepresenting that a website/organization/entity that it controls or owns provides independent reviews or opinions about a category of businesses, products, or services including the business or its products/services.  The final rule narrowed this provision by specifying that there must be a “material misrepresentation” and that the provision does not apply to websites that provide consumer reviews.
  • Review Suppression.  This provision prohibits threatening “unfounded or groundless” legal action, physical threats, intimidation or public false accusations in an attempt to prevent consumer reviews from being written or to cause a consumer review to be removed.  It also prohibits a business from materially misrepresenting that consumer reviews on its website or platform represent most or all reviews submitted when reviews are being suppressed based on ratings or negative sentiment.  The final rule’s version of this provision specifies that it applies to reviews that are “not displayable” rather than “not displayed” as proposed.  The FTC explained that this will only cover reviews that consumers are “unable to view even if they were to sort or filter the reviews differently.”  The language of the final rule also makes clear that the legitimate reasons to suppress reviews enumerated in the rule is not exhaustive.
  • Misuse of Fake Indicators of Social Media Influence.  This provision prohibits selling or distributing fake indicators of social media influence that can be used to materially misrepresent influence or importance for a commercial purpose.  It also prohibits purchasing or procuring fake indicators of social media influence to misrepresent influence or importance for a commercial purpose.  The final rule defines “fake indicators of social media influence,” a previously undefined term, as “indicators of social media influence generated by bots, purported individual accounts not associated with a real individual, accounts created with a real individual’s personal information without their consent, or hijacked accounts, or that otherwise do not reflect a real individual’s or entity’s activities, opinions, findings, or experiences.”  This is a helpful change for businesses, as the FTC confirmed that “if a company awards legitimate indicators of influence to certain users upon satisfaction of objective criteria reflecting the influence of the users, the company would not be selling ‘fake’ indicators, even if bad actors were able to deceive the company.”  The final rule also introduces a “knew or should have known” knowledge standard.

If you have any questions about the final rule and compliance strategy, please reach out to Laura Kim, Ali Remick, or Jessica Ke.

Photo of Laura Kim Laura Kim

Laura Kim draws upon her experience in senior positions at the Federal Trade Commission to advise clients across industries on complex advertising, privacy, and data security matters. She provides practical compliance advice and represents clients in FTC and State AG investigations. Laura advises on…

Laura Kim draws upon her experience in senior positions at the Federal Trade Commission to advise clients across industries on complex advertising, privacy, and data security matters. She provides practical compliance advice and represents clients in FTC and State AG investigations. Laura advises on a wide range of consumer protection issues, including green claims, influencers, native advertising, claim substantiation, Made in USA claims, children’s privacy, subscription auto-renewal marketing, and other digital advertising matters. In addition, Laura actively practices before the NAD, including recent successful resolution of matters for both challengers and advertisers. She is the Chair of Covington’s Advertising and Consumer Protection Investigations Group and participates in the firm’s Internet of Things Initiative.

Laura re-joined Covington after a twelve-year tenure at the FTC, where she served as Assistant Director in two divisions of the Bureau of Consumer Protection, as well as Chief of Staff in the Bureau of Consumer Protection and Attorney Advisor to former Chairman William E. Kovacic. She worked on key FTC Rules and Guides such as the Green Guides, Jewelry Guides, and the Telemarketing Sales Rule. She supervised these and other rule making proceedings and oversaw dozens of the Commission’s investigations and enforcement actions involving compliance with these rules. Laura also supervised compliance monitoring for companies under federal court or Commission order.

Laura also served as Deputy Chief Enforcement Officer at the U.S. Department of Education, where she helped establish a new Enforcement Office within Federal Student Aid. In this role, she managed investigations of higher education institutions and oversaw issuance of fines and adverse actions for institutions in violation of federal student aid regulations. Laura also supervised the borrower defense to repayment division and the Clery campus safety and security division.

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Photo of Alexandra Remick Alexandra Remick

Alexandra Remick is a member of the Advertising and Consumer Protection Investigations Group. Her practice focuses on regulatory and compliance matters related to consumer protection. She has experience advising clients on topics including endorsements, social media influencers, native advertising, automatically renewing subscriptions, consumer…

Alexandra Remick is a member of the Advertising and Consumer Protection Investigations Group. Her practice focuses on regulatory and compliance matters related to consumer protection. She has experience advising clients on topics including endorsements, social media influencers, native advertising, automatically renewing subscriptions, consumer reviews, and claim substantiation in a variety of contexts. She frequently provides advice on specific advertising compliance questions and works with companies on developing internal advertising compliance policies. She has also represented multiple clients in FTC investigations involving consumer protection issues, has conducted regulatory due diligence on multiple transactions, and has drafted comments on multiple rulemakings.

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Photo of Jessica Ke Jessica Ke

Jessica Ke is an associate in the firm’s Privacy and Cybersecurity and Advertising and Consumer Protection Investigations practice groups. Jessica advises clients on a wide range of regulatory and compliance issues, including compliance with state comprehensive privacy laws, advertising substantiation issues, and participation in…

Jessica Ke is an associate in the firm’s Privacy and Cybersecurity and Advertising and Consumer Protection Investigations practice groups. Jessica advises clients on a wide range of regulatory and compliance issues, including compliance with state comprehensive privacy laws, advertising substantiation issues, and participation in the regulatory process. Jessica also maintains an active pro bono practice.

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