U.S. FTC Implements Ban on Fake AI-Generated Reviews Starting October 13

FTC website on computer screen

The U.S. Federal Trade Commission (FTC) ban on fake and AI-generated customer reviews takes effect on Oct. 13, 2024. The final rule, which was announced in August, goes beyond a prohibition on fake product reviews. It also prohibits the buying and selling of followers and views on social media. 

The rule was in the works for nearly two years. The effort started with an “advanced notice of potential rule making” in November 2022. It then traveled through the bureaucracy, including public comments in February 2024, before eventually becoming a final rule.

“Fake reviews not only waste people’s time and money, but also pollute the marketplace and divert business away from honest competitors,” said FTC Chair Lina M. Khan in a statement announcing the final rule. “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.”

Once the rule takes effect, the FTC will have the ability to pursue civil penalties against those who fail to comply. The FTC’s previous efforts to combat fake reviews on a case-by-case basis was stymied by a lack of penalties and enforceable rules, the commission said in a statement.

Dig deeper: Consumers want to buy from the ‘right brand’

What does the FTC rule for online reviews prohibit?

Fake or false consumer reviews, consumer testimonials and celebrity testimonials

The rule bans testimonials that claim to be made by someone who does not exist. This part of the rule is targeting AI-generated fake reviews in particular.  But it also includes:

  • Reviews and testimonials by people who did not have actual experience with the business or its products or services.
  • Reviews and testimonials that misrepresent the experience of the person giving it. 
  • A prohibition against businesses creating or selling such reviews or testimonials and buying such reviews, procuring them from company insiders or disseminating such testimonials when the business knew or should have known the reviews or testimonials were fake or false.

Buying positive or negative reviews

The FTC rule also takes aim at businesses that provide compensation or other incentives conditioned on writing consumer reviews. Businesses can encourage consumers to leave reviews, but they cannot tell them what to say. The actual language here is, “expressing a particular sentiment, either positive or negative.” The FTC rule also clarifies that the conditional nature of the offer of compensation or incentive may be expressly or implicitly conveyed.

Insider reviews and testimonials

In its rule, the FTC prohibits certain reviews and testimonials written by company insiders that fail to clearly and conspicuously disclose the material connection to the business. It prohibits reviews and testimonials given by officers or managers of the company. 

Businesses cannot disseminate testimonials the business should have known was created by an officer, manager, employee or agent of the company.

The rule even takes insider reviews a step further, by imposing requirements when officers or managers solicit consumer reviews from their own immediate family, or from employees or agents — or when they tell employees or agents to solicit reviews from their relatives.

Company-controlled review websites

Business cannot misrepresent a website or entity it controls that provides independent reviews or opinions about a category of products or services that includes its own products or services.

Review suppression

The FTC is aiming to protect consumers that leave negative online reviews from any backlash. Its new rule prohibits a business from using unfounded or groundless legal threats, physical threats, intimidation or certain false public accusations to prevent or remove a negative consumer review. 

Businesses are also barred from misrepresenting the reviews on a review portion of its website. The business cannot say the review portion of its website represents all or most of the reviews submitted if reviews were suppressed due to their ratings or negative sentiment.

Misuse of fake social media indicators

The rule bans anyone from selling or buying fake indicators of social media influence, such as followers or views generated by a bot or hijacked accounts. This prohibition is limited to situations in which the buyer knew or should have known that the indicators were fake and misrepresent the buyer’s influence or importance for a commercial purpose.

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Why we care: Online reviews and testimonials were one of the features that promised to democratize the internet. You could get the insights opinions directly from consumers. From consumer reviews on Amazon to B2B software review sites, buyers could gather opinions before making purchase decisions — until the system was inevitably gamed.

The FTC’s rule puts some teeth behind enforcement, but will, at best, make a very tiny dent in the problem. For one thing, the U.S. FTC only has jurisdiction in the United States, so the plethora of fake reviews flooding the internet from other countries is unlikely to slow, let alone stop, because of the new rule. 

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**U.S. FTC Implements Ban on Fake AI-Generated Reviews Starting October 13**

In an era where artificial intelligence (AI) is reshaping industries and consumer experiences, the U.S. Federal Trade Commission (FTC) is taking decisive action to address the growing concern of AI-generated fake reviews. Starting October 13, 2023, the FTC will officially implement a ban on the use of AI-generated fake reviews, marking a significant step in its ongoing efforts to protect consumers from deceptive marketing practices. This move comes as part of a broader regulatory push to ensure transparency and fairness in the digital marketplace.

### Why the Ban on AI-Generated Fake Reviews?

Online reviews have become a cornerstone of consumer decision-making. Whether it’s purchasing a product, booking a hotel, or choosing a restaurant, reviews play a critical role in shaping consumer perceptions and influencing purchasing behavior. However, the rise of AI technology has made it easier for businesses and bad actors to generate fake reviews at scale, often with the intent of misleading consumers.

AI-generated reviews can be difficult to detect, as they are often written with sophisticated language models that mimic human writing styles. These reviews can create a false sense of trust in products or services, leading consumers to make purchases based on deceptive information. The FTC’s new rule aims to curb this practice by holding businesses accountable for the use of AI-generated content that misrepresents consumer experiences.

### Key Provisions of the FTC Ban

The FTC’s ban on fake AI-generated reviews includes several key provisions designed to protect consumers and ensure that businesses operate with integrity:

1. **Prohibition of Fake Reviews**: The rule explicitly prohibits businesses from using AI-generated content to create fake reviews or testimonials that mislead consumers. This applies to both positive and negative reviews, as businesses could use AI to either promote their own products or disparage competitors.

2. **Accountability for Third-Party Services**: Many businesses rely on third-party services to manage their online reputation, including generating reviews. The FTC’s rule extends to these services, making businesses responsible for ensuring that any reviews generated by third parties are authentic and not AI-generated fakes.

3. **Transparency Requirements**: Businesses must disclose if any reviews or testimonials are generated by AI, even if they are based on real customer feedback. This ensures that consumers are fully informed about the nature of the content they are reading.

4. **Penalties for Non-Compliance**: The FTC has outlined significant penalties for businesses that violate the ban. Companies found to be using AI-generated fake reviews could face hefty fines, legal action, and damage to their reputation. The FTC has indicated that it will actively monitor compliance and pursue enforcement actions against violators.

### The Role of AI in Online Reviews

AI has the potential to revolutionize many aspects of business, including customer service, product recommendations, and content creation. However, the misuse of AI to generate fake reviews undermines consumer trust and distorts the competitive landscape. The FTC’s ban is a response to growing concerns about the ethical use of AI in marketing and advertising.

In recent years, AI-generated content has become increasingly sophisticated. Tools like OpenAI’s GPT-4 and other large language models can produce human-like text that is difficult to distinguish from authentic reviews. While these tools can be used for legitimate purposes, such as automating customer service responses or generating product descriptions, they can also be exploited to create fake reviews that deceive consumers.

The FTC’s new rule is not an outright ban on the use of AI in marketing, but rather a targeted effort to prevent the misuse of AI for deceptive practices. Businesses that use AI ethically and transparently will not be affected by the ban, but those that attempt to manipulate consumer perceptions through fake reviews will face serious consequences.

### Implications for Businesses

The FTC’s ban on AI-generated fake reviews will have wide-ranging implications for businesses across various industries. Companies that rely on online reviews as part of their marketing strategy will need to ensure that their reviews are authentic and comply with the new regulations. This may require businesses to audit their existing reviews, implement new verification processes, and work closely with third-party reputation management services to ensure compliance.

For businesses that have used AI-generated reviews in the past, the ban represents a significant shift in the regulatory landscape. Companies will need to adjust their practices to avoid potential penalties and legal challenges. In some cases, businesses may need to remove or revise existing reviews that were generated using AI.

On the other hand, the ban could benefit businesses that have been harmed by competitors using fake reviews to gain an unfair advantage. By leveling the playing field, the FTC’s rule will help ensure that consumers can make informed decisions based on genuine feedback, rather than being misled by deceptive content.

### Consumer Impact

For consumers, the FTC’s ban on AI-generated fake reviews is a welcome development. The proliferation of fake reviews has made it increasingly difficult for consumers to trust the information they find online. By cracking down on deceptive practices, the FTC