The Federal Trade Commission (FTC) is taking a stand against deceptive practices in online reviews and social media metrics. With a proposed formal ban, the FTC intends to crack down on fake reviews, testimonials, and the use of phony followers and views to artificially inflate social media metrics. This means we’ll see a lot more hotels and travel businesses get authentic reviews and followers in the future!
This latest move by the FTC builds upon previous actions targeting fake reviews. In 2019, the agency fined a third-party Amazon seller for purchasing fake reviews, while Amazon itself has taken legal action against providers of phony reviews. Earlier this year, the FTC imposed a $600,000 penalty on the owner of a vitamin brand for engaging in "review hijacking" on the Amazon platform.
The new rule, which has been in development since October, is nearing completion and is expected to come with severe penalties for those involved in the promotion of fake reviews and testimonials. As reported by The Washington Post, businesses found guilty of "buying, selling, and manipulating online reviews" could face fines of up to $50,000 for each fraudulent review. Furthermore, the fine applies not only to the act of posting a fake review but also to every instance where a customer views it. Consequently, if a fake review has been seen by just 20 individuals, the hotel responsible could be liable for up to $1 million in fines.
The director of the FTC's Bureau of Consumer Protection, Samuel Levine, stated that the proposed rule on fake reviews is to use all available means to attack deceptive advertising. The rule should help level the playing field for honest companies. Under the new regulation, the FTC aims to outlaw businesses from writing or selling consumer reviews and testimonials by fictitious individuals who lack experience with the product or service or who misrepresent their experiences. Moreover, companies will be prohibited from obtaining or disseminating reviews and testimonials that they knew or should have known to be fake or false.
By taking these steps, the FTC seeks to foster an environment of transparency and fairness in the digital marketplace, safeguarding customers from misleading hotel advertising practices while promoting honest competition among businesses. The Federal Trade Commission (FTC) is introducing comprehensive regulations to combat these deceptive practices in online reviews and social media metrics. The proposed rule aims to address various fraudulent tactics employed by hotels, including repurposing existing reviews, offering compensation for reviews, and manipulating review suppression.
Under the new regulation, it will be prohibited to repurpose existing reviews to make them appear as if they were written for different hotel services, a practice commonly known as "review hijacking." Hotels will also be barred from providing payments or other forms of compensation in exchange for positive or negative reviews. However, hotels will still be allowed to request guests to leave reviews, as this is an important avenue for small businesses to enhance their reputations.
To ensure transparency, managers, and officers will need to disclose their affiliation when posting reviews of their own hotel’s services. Furthermore, they will be restricted from soliciting reviews from family members or employees under certain circumstances. Hotels will not be permitted to operate websites claiming to offer independent reviews of product categories that include their offerings.
The proposed rule also addresses the issue of fake followers and views used to artificially inflate social media numbers. The FTC intends to prohibit the purchase of such indicators for misrepresentation. This provision could have implications beyond commerce, potentially impacting influencers who rely on genuine engagement to secure hotel offers and deals.
Additionally, the FTC acknowledges the emergence of generative AI and its potential impact on creating fake reviews. The agency recognizes the need to address this issue as bad actors may exploit AI chatbots to generate fraudulent content.
While these provisions align with the FTC's objective of fostering transparency and honesty in the hotel industry, the enforcement of these measures poses challenges. The agency clarified that it will not receive additional resources to combat fake reviews.
However, having a formalized rule can strengthen the FTC's legal position. Dealing with overseas companies that sell and post fake reviews may prove difficult. Nonetheless, the introduction of a formal ban and the threat of substantial fines may serve as a deterrent to some hotels considering the use of fake reviews.
This will undergo a 60-day public comment period, during which they consider feedback and potential revisions before finalizing the directive.