Bah, humbug! Certain advertisers received a lump of coal in their stockings from FTC staff. Right before the holidays, the Commission issued warning letters to 10 companies alerting them of potential violations of the agency’s Rule on the Use of Consumer Reviews and Testimonials (“Consumer Review Rule” or “Rule”). The FTC did not publicly identify which companies received a letter, what industries the companies were in, or even what aspect(s) of the Rule the FTC was specifically concerned about.
One Star
According to the FTC, the letters were based on consumer complaints and company-provided information. While the letters do not reflect any formal determination by the Commission as to whether the companies have actually violated the Rule, they do put companies on notice that (i) the FTC is monitoring their practices with respect to consumer reviews and testimonials, and (ii) future infringements could lead to lawsuits or other legal action, including civil penalties of $53,088 per violation.
Customer Feedback
The Consumer Review Rule, which took effect in October 2024, addresses deceptive and unfair conduct involving consumer reviews and testimonials. (You can read our earlier posts on the Rule here and here.)
Under the Rule, advertisers are prohibited from:
- Misrepresenting whether a reviewer actually used a product or had a genuine experience
- Conditioning compensation or incentives on reviewers expressing a specific sentiment – in other words, paying for positivity or punishing negativity
- Failing to disclose insider reviews, such as those written by employees, relatives, or company partners
- Suppressing or removing negative reviews or operating “independent” review websites that are, in fact, controlled by the business
- Manipulating social media indicators, such as purchasing fake followers or views to inflate perceived influence
Best Practices
With the FTC signaling a focus on consumer reviews, here are a few steps advertisers can take to ensure compliance with the Rule:
- Audit review collection practices: Ensure reviews come from real customers and reflect genuine experiences. Avoid any solicitation that influences sentiment.
- Disclose insider relationships: Make transparency a default, not an afterthought. Employees, executives, and relatives must clearly, conspicuously, and “unavoidably” identify their relationship to the company if they provide reviews.
- Do not filter or suppress bad reviews: Negative feedback is part of the ecosystem. While monitoring reviews to ensure they remain on topic and do not include infringing material, PII, and/or hate speech is acceptable, do not suppress, block, or incentivize customers to change reviews simply because they are critical of a product or service.
- Inform and monitor third-party vendors: If agencies or marketing firms manage your customer reviews, ensure they follow FTC rules. You’re responsible for their conduct.
- Train teams: Everyone – marketing, influencers, customer service, PR – should understand what is and isn’t allowed under the Rule.
The FTC also published an FAQ to help businesses better understand how to comply with the Rule.
[View source.]
