Small Changes Could Strengthen the Proposed Fake Review Rule

Reviews play a major role in e-commerce sales by allowing consumers to make informed decisions about products and businesses based on information from previous customers. However, fake reviews can impact trust in products and businesses by deceptively influencing consumer behavior. Following a series of enforcement actions against companies that it determined intentionally suppressed negative reviews and paid for fake reviews, the Federal Trade Commission (FTC) has taken steps to specify certain illegal review practices.

On June 30, 2023, the FTC proposed the Trade Regulation Rule on the Use of Consumer Reviews and Testimonials to prohibit marketers from engaging in deceptive practices in reviews, such as posting fake reviews, suppressing honest negative reviews, and paying third parties for positive reviews. This rule could help address a serious problem in e-commerce, however, gaps in the proposed rule limit its effectiveness in combating deceptive practices. The FTC should ensure that the final rule addresses fake review brokers and includes exemptions that support and promote innovations for legitimate reviews, including the use of AI-generated summaries.

The FTC's proposed rule would prohibit certain deceptive practices, including creating, purchasing, distributing, or selling fake reviews; intentionally misusing or repurposing reviews for multiple products; buying or incenting reviews with a predetermined sentiment; not disclosing insider connections to the reviewed business; suppressing negative reviews; and buying, selling, or distributing false indicators of social media influence, such as buying fake followers on a social media platform.

The proposed rule focuses on businesses buying reviews, individuals writing fraudulent reviews, and review misuse. While these changes would help address fake reviews online, the proposed rule leaves gaps for effective enforcement. For example, the proposed rule does not capture all aspects of fake review schemes, particularly fake review brokers and their operations.

The FTC could strengthen the proposed rule and enforcement with small changes. First, the FTC should explicitly mention fake review brokers as key parties in fake review schemes. Fake review brokers can be individuals operating alone, product sellers, or companies posing as legitimate marketing services that engage consumers to write and submit reviews. The rule should clarify how brokers facilitate and procure fake reviews and categorize facilitation and procurement of fake reviews as deceptive practices. Although the proposed language mentions the creation, purchase, distribution, and sale of fake reviews, it does not specifically address the role of brokers who, while not creating reviews themselves, recruit reviewers, instruct them on crafting fraudulent content, and connect them with companies seeking to buy fake reviews.

Recognizing fake review brokers and their practices would quell groups promoting fake online reviews. Brokers use large, public groups to find reviewers on social media platforms like X (formerly Twitter), Facebook, or Instagram. Currently, the proposed language falls to legitimate businesses that rely on reviews to police and report groups to the respective social media platforms. For example, Yelp reported more than 950 suspicious groups, posts, and individuals to online platforms in 2021. Amazon's reporting led to the removal of groups with more than 11 million members in the same year. In addition to creating an avenue for FTC enforcement action against fake review brokers, naming fake review brokers and fake review broker operations in the rule would prompt social media platforms to ban review broker activity and groups, if this is not already banned, and proactively prevent fake review brokers from operating on their platforms.

Additionally, the FTC should consider incorporating exemptions that foster innovations to enhance consumer reviews, as the proposed rule's language may confuse businesses on what counts as misuse of legitimate reviews. For example, the proposed rule prohibits a business from repurposing a consumer's review for one product to a different product. The FTC specifically names changing a product listing to a different product without removing previous reviews or copying reviews from one product to another. However, it fails to address if review-linking, or connecting reviews for similar products with minor differences, such as size, color, and flavor, is considered review repurposing.

The rule also overlooks AI-generated aggregated reviews. AI-generated reviews provide an overall review of a product by highlighting common consumer experiences mentioned in the reviews. These reviews may also highlight specific consumer comments about the seller-for example, shipping time, response rate, or refund practices-that apply across products. In both instances, reviews could be considered deceptive because they rely on repurposing consumer experiences to refer to different products, even if those experiences are legitimate and relevant. Adding exemptions for review repurposing that specifically mention review-linking and AI-generated reviews would allow consumers to continue benefiting from innovations in legitimate reviews and remove confusion about potential liability.

The Trade Regulation Rule on the Use of Consumer Reviews and Testimonials represents a significant stride toward curbing deceptive practices in online reviews, but it still has several shortcomings. The FTC should expand the rule to include fake review brokers, address the mechanisms of fake review facilitation, and clarify exemptions that foster technological innovations. By incorporating these changes, the FTC would protect consumers from misleading information and support the integrity and reliability of online marketplaces.

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