As reported by CNBC, the Federal Trade Commission voted unanimously on August 14th to prohibit marketers from using fabricated reviews, including those generated using AI technology, and other deceptive practices to endorse their products and services.
All five FTC commissioners unanimously approved the final rule, which will become effective 60 days after its publication in the Federal Register, the official repository of rules and announcements by the government.
Ordinarily, rules are published shortly after their approval, indicating that consumers can anticipate the implementation of the FTC's prohibition on fake reviews to commence by mid-October.
"Fake reviews not only waste people's time and money but also contaminate the marketplace and divert business away from honest competitors," stated FTC Chair Lina Khan.
In addition to banning reviews composed by nonhumans, the FTC's regulation also prohibits companies from compensating for either positive or negative reviews to falsely elevate or disparage a product. It also bars marketers from overstating their own influence by, for instance, paying for bots to artificially boost their follower count.
According to the rule, violations could lead to fines being levied for each infraction.
This implies that for an e-commerce site with hundreds of thousands of reviews, penalties for fake or manipulated reviews could rapidly accumulate.
With the surge of e-commerce, influencer marketing, and generative AI, more advertisers are resorting to automated chatbots such as ChatGPT to swiftly produce user reviews for products sold online.
The outcome: Consumers sometimes end up purchasing items based on false acclaim or deceptive pledges.
Fabricated reviews are already prohibited, and certain e-commerce companies have endeavored to resist the deceitful marketing tactic.
For instance, in July 2022, Amazon filed lawsuits against over 10,000 Facebook group administrators for allegedly brokering fake reviews.
Several major online review platforms endorse the new rule.
"While Yelp's policies have long barred practices delineated in the FTC's final rule, we believe the enforcement of this new rule will enhance the review landscape for consumers and help level the playing field for businesses," stated Aaron Schur, general counsel for the major online review platform Yelp, in a statement to CNBC.
Under the new rule, companies that may have previously self-regulated will now be subject to more rigorous government supervision.
Instead of pursuing individual cases through the Department of Justice, this rule will fortify the FTC's capacity to enforce the ban internally.
The declaration coincided with the White House's inaugural "Creator Economy Conference," during which Biden administration officials convened 100 online influencers and digital content professionals to hear industry concerns.
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