Latest FTC Rule Bans Fake Reviews: Impact on Affiliate Publishers

November 14, 2024

4 min read

Abhilash Menon

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A whopping 80% of consumers reported they've encountered a fake review in the past year.

Reviews are what most folks rely on to find the best products and services, yet many third-party reviews on both small and large sites feature fake reviews, authors, and products. This surge is due to black-hat AI tools mimicking human-like writing increasing the spread of bogus reviews.

To combat the spread of fake reviews and testimonials, the Federal Trade Commission (FTC) issued the Trade Regulation Rule on the Use of Consumer Reviews and Testimonials (CRT Rule). It was implemented on October 21, 2024, meaning merchants and content publishers must ensure all third-party editorials fully comply with the new guidelines.

This rule targets a range of deceptive practices which includes the following:

Crackdown on Fake Reviews

The rule bans merchants and publishers from creating, purchasing, or promoting fake reviews and testimonials that misrepresent the identity or experience of the reviewer. It includes reviews generated by AI or written by individuals without real experience with the product or service. The aim is to enhance the reliability of online reviews and protect consumers from deceptive information in the marketplace.

End of Paid Reviews

The FTC rule prohibits businesses from offering compensation or incentives for reviews expressing a specific sentiment - positive or negative. This applies to direct and indirect offers, targeting tactics that manipulate product ratings and consumer perceptions. For example, offering $25 for a 1-star review or $25 for a review “telling everyone how much you love our product” would violate the CRT Rule. By removing financial incentives for biased reviews, the rule aims to foster genuine feedback, creating a more trustworthy marketplace for consumers and fairer competition among businesses.

Transparent Insider Reviews and Testimonials

Company officers, managers, and their immediate relatives must disclose their relationship to the business when posting reviews or testimonials. Reviews from insiders without these disclosures are prohibited, as are reviews solicited from employees or relatives when they fail to reveal this connection. The FTC rule seeks to prevent biased endorsements and ensure transparency while allowing general invitations for customers to leave reviews without hidden insider connections.

Combat Fake Indicators of Social Media Influence

The FTC rule targets deceptive social media practices by banning the sale or purchase of fake influences, such as bot-generated followers or views from hijacked accounts. Fake indicators include bot-created accounts, accounts made with personal data without consent, and those that don’t reflect real activities or opinions. This ban applies when brands know or should know the indicators are fake. The rule also prohibits using bots to inflate metrics and suppressing negative reviews through threats or false accusations.

Audit Company-Controlled Review Websites

The CRT Rule prevents businesses from presenting their websites or entities as offering independent reviews or opinions on their products or services. For example, a company cannot create fake trust seals or badges to endorse its products on a review site it controls. Insider reviews from executives, managers, and relatives must also disclose their connection to the business. This rule prevents misleading endorsements and promotes transparency in reviews.

Prevent Negative Review Suppression

Businesses cannot hide negative reviews and are barred from using threats, intimidation, or false accusations to remove or prevent a negative review. However, reviews that are defamatory, sexually explicit, or reasonably believed to be fake maybe withheld. The rule ensures that reviews displayed are honest, with no suppression of negative feedback through unfair practices.

CRT Rule Non-Compliance: Penalties and Fines

The new guidelines from FTC include fines of up to $51,744 per violation, which could quickly add up for sites with multiple fake or manipulated reviews. To set an example, the FTC may pursue high-profile cases to enforce the rule. If one spots a bogus review or receives an offer for a positive review in exchange for monetary benefits, a formal complaint can be made at reportfraud.ftc.gov. The FTC deems civil penalties necessary to deter deceptive practices effectively, ensuring stronger enforcement against fake reviews in the marketplace.

FTC New Rule: Why This Matters to Affiliate Publishers

The latest FTC rule against fake reviews impacts affiliate publishers by requiring all reviews to be genuine and free of incentives, thereby building trust with consumers and platforms like Google and Amazon, which are increasingly pressuring publishers to comply with transparency standards.

A striking example of the rule's impact is Gannett’s decision to close its renowned product review site, Reviewed, amid concerns over AI-generated content. The swift shutdown of such a prominent platform underscores the serious risks publishers face when blindly relying on automated reviews.

Best Practices for FTC Compliance

Here are a few tips to ensure CRT Rule compliance:

Content verification: Ensure all reviews are genuine by verifying they come from real users with authentic experiences.
Transparent review collection: Disclose any relationships with reviewers and avoid offering incentives for specific sentiments, ensuring unbiased feedback.
Affiliate partner education: Educate affiliate partners on FTC-compliant practices by conducting workshops, seminars, or webinars, to help maintain third-party content transparency.
Routine Audits and Training: Conduct regular content audits and provide ongoing training for staff to stay updated on FTC guidelines, reducing the risk of violations.

Winding up

Publishers need to monitor their affiliate operations more closely to ensure third-party content is authentic and aligns with the latest FTC rulebook. However, regular operational audits are challenging due to staff and time constraints. This ends up being expensive for publishers because fake reviews hurt the credibility of the site hosting them more than the brand itself. That said, an AI-powered approach can help publishers protect their reputations while staying compliant.

NucleusLinks helps publishers adapt to the stringent FTC standards by automating manual tasks, freeing up bandwidth to granularly review third-party content and ensure its authenticity.

Author

Abhilash Menon

Abhilash, the Marketing Manager at Affinity Global Inc., spearheads content strategy and marketing initiatives for the NucleusLinks business unit. On most days, he’s a glorified coffee snob, while trying to deliver the best value to affiliate publishers through his marketing efforts.