It’s an experience that’s all too common for American consumers. You’re looking to try out a new mechanic shop, hair salon, or some other retailer. Not sure which to visit, you turn to the internet, open a search engine, and browse the business’s online reviews. Things look great – nearly five stars – so you take a chance on the new business only to find out that your experience varies drastically from those posted online.
You’ve likely fallen for fake online reviews. Something which is unfortunately all too common. Now though, the Federal Trade Commission (FTC) is considering a proposal to penalize businesses who engage in this deceitful practice.
The FTC proposed a rule that prohibits businesses from buying or selling fake consumer reviews, testimonials, and indicators of social media influence. The proposed rule prohibits businesses from incentivizing positive or negative reviews, threatening people to prevent or remove negative reviews, or suppressing negative reviews. The rule also prohibits reviews by employees or “insiders” without disclosing the connection to the company.
Fake Reviews are Costly for Both Businesses and Consumers:
Reviews are critical tools consumers use to help pick which products and services to buy. But the market is filled with businesses that try to dupe consumers by posting or purchasing fake reviews. Thousands of fraudulent organizations sell fake reviews. And many companies deploy tactics to suppress bad reviews so that consumers do not know the full story about the products or services they just added to their online shopping cart.
Fake reviews not only cost consumers money and time, but they also hurt a business’s reputation and undermine consumers’ trust in brands. That is why review platforms and retailers invest heavily in technology and staff to remove millions of fake reviews every year.
For their part, businesses aren't waiting for the FTC to take action. In October, several large firms announced the first Global Coalition for Trusted Reviews. The coalition will work to develop, share, and implement cross-industry best practices for both hosting online reviews and detecting where they are abused on their platforms.
How Can the FTC Make the Rule Better?
The Chamber supports much of what is included in the FTC’s proposed rule. But in our own review, we have a few suggestions the agency should consider to make the rule even better.
- Any rule should support a robust review ecosystem. Therefore, the FTC should not hold retailers or websites liable (1) for efforts to remove harmful third-party content from their website, and (2) for simply displaying, hosting, aggregating, or prompting consumers to write a review or testimonial.
- The FTC should only include prohibitions for acts or practices that are prevalent in the marketplace.
- The FTC should encourage, not eliminate, opportunities in the rulemaking record for public discourse.
The U.S. Chamber encourages the FTC to work more closely with the business community to fight fake reviews. The business community is a significant part of the solution to combating bad actors who take advantage of consumers.
A strong rule considers the experience of businesses and consumers. The Chamber will continue to engage with the FTC to achieve that goal.