Greetings TCPAWorld!

HUGE NEWS. 

As of October 21, 2024, the Federal Trade Commission (“FTC”) began enforcing strict new rules against fake reviews and testimonials. For businesses relying on online reviews, non-compliance could mean severe penalties of up to $51,744 per violation. Yes, you read that right: PER VIOLATION. If you need a refresher, check out John Henson’s blog for a deep dive into the FTC’s final rule. Now that it’s go-time let’s break down what’s changed and what you need to do to stay out of hot water.

The FTC’s rule, finalized on August 14, 2024, targets a range of deceptive review practices:

1. No fake reviews: Reviews must come from real customers with genuine experiences—AI-generated or ghostwritten reviews that misrepresent consumer experience are prohibited.
2. Paid reviews have a catch: Compensation for reviews is allowed but can’t be tied to leaving a positive or negative review. In other words, you can offer incentives for writing a review, but you can’t dictate the content or sentiment of that feedback.
3. Disclose insider reviews: Employees, officers, and anyone with a material connection must clearly disclose their relationship when leaving reviews.
4. Be transparent: Review websites must be truly independent, not company-controlled.
5. Don’t suppress negative reviews: Using legal threats, intimidation, or manipulating review displays to hide negative feedback is strictly prohibited.
6. Avoid fake engagement: Purchasing or selling fake social media influence indicators—like followers or likes—is banned if they misrepresent commercial influence.

Each violation will be judged case-by-case. This, in turn, emphasizes the need for businesses to carefully review all aspects of their review management process.

It’s important to note that businesses that generally solicit reviews in good faith but inadvertently receive false or fake submissions can still fall under a safe harbor provision. However, this does not apply if businesses selectively solicit reviews to skew sentiment positively.

So, what is the word of the day? PROACTIVE.

Businesses must take a proactive approach to align with the new FTC rules.

First, take a hard look at how you manage reviews. Are you collecting honest feedback, or is there something shady in the mix? Be sure to know and understand how you moderate and display reviews. This is all about staying ahead of the game. If you spot any potential issues, tackle them head-on before they become expensive problems.

Then, tighten up your policies. Ensure everything you do with reviews—especially if you’re offering incentives—is above board. Yes, you can reward people for leaving reviews, but you absolutely cannot dictate the tone. Your policies should make that crystal clear, so there’s no gray area in between.

It might also be time for a team refresh. Make sure your organization understands the new rules, especially anyone handling reviews. Train them in what’s okay and what’s a no-go. Transparency is huge now; if your team or insiders are involved in reviews, they need to disclose their connections openly. There should be absolutely no hiding the ball.

Lastly, stay vigilant. Keep an eye on your reviews and social media activities. Dig into it if you see sudden jumps in followers or feedback that doesn’t seem legit. Catching fake engagements early can save you from those massive fines later.