The Federal Trade Commission (FTC) has finalized a new rule aimed at curbing the proliferation of fake reviews and product testimonials online, particularly those generated by artificial intelligence. This rule represents a significant step in the FTC's efforts to combat deceptive advertising practices in the digital marketplace.
The final rule explicitly prohibits businesses from creating or selling products that feature fake reviews, including those generated by AI technologies. This crackdown also extends to platforms that buy or generate fake reviews to enhance the perceived credibility of their products or services.
In addition to addressing fake reviews, the rule targets the manipulation of social media metrics. The FTC will now prohibit the buying or selling of fake social media engagements, such as likes, follows, or views, especially when these metrics are created by bot accounts. However, the rule's application to social media is limited to situations where the buyer "knew or should have known" that the engagement was being artificially generated by bots.
FTC Chair Lina M. Khan emphasized the importance of the new rule, stating, "Fake reviews not only waste people’s time and money but also pollute the marketplace and divert business away from honest competitors. 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."
The FTC's efforts to address fake reviews began in November 2022, with the commission refining the proposed rules over the past year before finalizing the version published this week. The rise of generative AI technologies has made the creation of fake reviews easier and more pervasive, prompting the FTC to take decisive action.
The new rule, which received unanimous approval from the FTC, will take effect 60 days after its publication in the Federal Register. This regulation is expected to have a significant impact on how businesses and online platforms operate, ensuring greater transparency and trust in the digital marketplace.
The finalization of this rule comes amid increased scrutiny of major tech companies by the FTC, as evidenced by ongoing investigations, including the probe into Microsoft's $620 million deal with Inflection AI.
The FTC's new rule is seen as a critical measure to uphold the integrity of online reviews and protect consumers from being misled by deceptive practices in the age of AI.
