USA Against Internet Fraud: Huge Penalties for Fake Reviews
Don’t believe everything you read – you can get paid.
American Federal Trade Commission (FTC), which acts as a consumer protection watchdog, proposes to revise the rules regarding online reviews and recommendations in advertising. Changes to the rules may result in increased legal risks for individuals who deceive consumers by posting fake reviews of products or services online for a fee.
New rules, proposed by the FTC , aimed at combating fake reviews. If approved, each fake review viewed by a consumer can be fined up to $50,120 . At the same time, political advertising remains outside the scope of these rules.
The FTC defines fake reviews as messages written by product manufacturers or their representatives who do not disclose their status. Such testimonials can mislead consumers into purchasing goods or services that they would not have bought if they knew the true circumstances.
According to research cited by the FTC, such fraud results in a loss of consumer welfare of approximately $0.12 out of every dollar spent on the platform.
In the proposed supervisory body revocation rule it says that, according to the platforms themselves, the share of fake reviews is about 4%, although a third-party survey conducted by Fakespot in 2021 found that “nearly 37.6% of reviews on Walmart.com were misrepresented, for Amazon this figure was 27.6%.
The e-commerce industry, which has been unable or unwilling to tackle such practices on its own, welcomes these changes. The FTC has responded to calls for increased oversight by proposing updated Advertising guides new rules for using consumer reviews and recommendations, and a list of frequently asked questions for marketers.
The proposed rules prohibit the sale or receipt of fake reviews and recommendations, the purchase of positive or negative reviews, the non-disclosure of insider reviews, the establishment of company-controlled review websites, and a range of other fraudulent activities.
Bloggers, influencers, and others in the online community should review the updated rules as the FTC’s interpretation of the rules covers a wide range of issues.