FTC wants to ban fake product reviews, warns AI could exacerbate problem

Businesses could soon be fined a hefty sum for hosting or promoting fake product reviews online if the Federal Trade Commission has its way.

Faux five-star and rave reviews of less-than-stellar consumer goods can boost businesses’ profits while deceiving consumers, according to the FTC, which has proposed a rule to crack down on businesses that buy, sell or promote phony user ratings of their products. 

If the rule is finalized, violators would be subject to penalties of up to $50,000 per infraction, depending on the case. 

Generative AI tools such as ChatGPT, which can write human-sounding but bogus product reviews, threaten to compound the problem, according to the FTC. The new technology could enable bad actors to generate significantly higher volumes of fake reviews in order to generate unearned interest in their products.

Deceptive reviews hurt consumers by making it hard to obtain genuine, factual information about products they’re considering buying. 

“Level the playing field”

Large volumes of fake reviews for a product can boost its visibility among consumers while obscuring products from more trustworthy companies. 

“Our proposed rule on fake reviews shows that we’re using all available means to attack deceptive advertising in the digital age,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection said in a statement.  “The rule would trigger civil penalties for violators and should help level the playing field for honest companies.”

The FTC added that case-by-case enforcement against individual bad actors is likely not wide-reaching enough to discourage deceptive behavior.  

The proposed enforcement action comes at a time when a large share of online reviews aren’t credible. According to a U.S. PIRG estimate, between 30% to 40% of online reviews are “concocted or are in some way not genuine.”

Faux reviews surged during the pandemic when U.S. shoppers made the bulk of their purchases over the internet versus in stores, the group noted. 

Phony product ratings have serious implications. Nearly 90% of online shoppers rely on reviews to guide their purchase decisions, according to U.S. PIRG.

“Not only does this harm consumers who are trying to make informed buying decisions, fake reviews also hurt honest businesses who make sure their online reviews are genuine. When people lose confidence in reviews, legitimate positive reviews don’t mean as much. So consumers lose. Honest businesses lose. Dishonest businesses win,” PIRG stated in its report. 

“Review hijacking”

The FTC’s proposed rule would help mitigate much of the harm fake reviews cause. 

For one, it would make selling and buying fake reviews — not reviews written by real consumers who have experience with a given product or service — illegal.

The rule also proposes cracking down on so-called “review hijacking.” This consists of repurposing a genuine consumer review written for one product, so that it appears to pertain to a substantially different product.

Additionally, under the proposed enforcement, company insiders cannot review their own products. 

Under the rule, businesses cannot bribe people to leave positive reviews, or threaten them if they’re inclined to leave negative reviews. Companies under the proposed rule would be permitted to offer customers gift cards for leaving a review, so long as the company doesn’t dictate the sentiments expressed.