When the Federal Trade Commission published the final Rule on the Use of Consumer Reviews and Testimonials (the “Rule”) in late 2024, I waited with bated breath for the other shoe to drop; this felt like the dawning of a new frontier of enforcement in the world of fake reviews (see how I described it at the time in this article). Importantly, the Rule codified prohibitions against a handful of practices regarding the creation and use of deceptive reviews such that the FTC could go straight to federal court to sue for violations of the Rule and could seek civil penalties of over $53,000 per violation; this would be a powerful weapon for the Commission to supplement its authority to file administrative complaints. Alas, we had heard mostly crickets from the Commission for over a year now, and some may have questioned whether the new Rule was all bark and no bite. Until recently, the only significant activity we knew about was the sending of warning letters to ten companies last December, although we don’t know who the recipients were or what the FTC claimed they were doing wrong.

Well, times have changed. Last month, the FTC announced a proposed Consent Order with the makers of TruHeight, a dietary supplement that purported to promote height growth in children and teenagers. While much of the Administrative Complaint focused on unsubstantiated claims about the product’s efficacy, it also flagged tactics that it alleged violated the new Rule (specifically identifying activities occurring after October 21, 2024, the effective date of the Rule), including (i) offering customers incentives in exchange for posting 5-Star reviews, (ii) having employees post fake reviews, and (iii) creating fake social media profiles and using them to post positive comments on the defendant’s social media pages.

Then, on May 11, the DOJ (acting on referral from the FTC) and the State of Illinois filed a Complaint in the Northern District of Illinois against Premium Home Service, a business that not only advertised fictitious local home repair businesses across the country in an effort to lure repair calls that it would try to outsource to unknowing independent technicians (if it could find them), but also adopted a few activities expressly prohibited by the Rule, including posting fake five-star reviews for those fictitious businesses. 

While no legitimate business would consider knowingly behaving in the ways alleged in either of these Complaints, these actions by the Commission should be considered the tip of a potential iceberg and every business that manages reviews should pay attention. Even if your business isn’t intentionally trying to use fake reviews to deceive consumers, there are some clear boundaries laid out by the Rule that you might inadvertently cross if you aren’t paying attention and don’t have the right processes and frameworks in place to manage reviews. To recap, the Rule outlines six specific areas that are prohibited:

• Fake reviews: The writing, purchase, sale, procuring, or publication by a business of consumer or celebrity reviews or testimonials – including from officers, managers, employees, or agents, or their immediate relatives (collectively, “Insiders”) – that are “fake”, either because (i) the reviewer doesn’t actually exist, (ii) the reviewer didn’t actually use or otherwise have experience with the product or service, or (iii) the review materially misrepresents the reviewer’s actual experience.

• Buying sentiment: Providing compensation or other incentives in exchange for reviews that express a particular sentiment – i.e., conditioning incentives on a review being positive or negative.

• Disclosure by Insiders of material connections: Insiders posting reviews that do not contain a clear and conspicuous disclosure of the reviewer’s relationship to the business. (Note that the Endorsement Guides require proper disclosure by anyone with an unexpected material connection, but this Rule is only violated if the offender is an Insider and certain conditions are met.)

• Deceptive websites: Setting up sites that appear to be independent review sites when in fact they are controlled by a business whose products or services are reviewed.

• Review suppression: Suppressing reviews, either by intimidation or by only publishing certain reviews (e.g., only positive reviews) and misrepresenting that those reviews represent most or all of the reviews submitted. (Note that it is permissible to suppress reviews that include confidential information, are defamatory or harassing, that contain personal information or someone’s likeness, are discriminatory, or that are clearly false.)

• Fake indicators: Misusing fake indicators of social media influence, such as buying or selling fake followers, likes, subscribers, views, shares, saves, etc.

Every one of the above is currently on the table for a potential challenge by the FTC.

Last but not least, even though the FTC appears to have just now stepped up to the plate to take action under the Rule, we have already seen a number of self-regulatory challenges before the National Advertising Division and class actions filed in Florida, California, and Illinois alleging violations of state laws based on some of the same behaviors prohibited by the Rule. 

In short, the law looks like it is starting to catch up with the technologies that many businesses use to exploit consumer reviews, and the cries of “Wolf!” you may have heard from lawyers might be legitimate. If you have questions about what this means for you or if you’d like to discuss this ever-evolving space, I can be reached at jim.dudukovich@nelsonmullins.com.