Federal Trade Commission Announces Final Rule Regarding Fake Reviews and Testimonials
There is a lot in this new rule (adopted Aug 14 2024), and as always the devil is in the details. This is the main FTC announcement here and the full 163 page justification, selected outside comments and the actual rule (starting at page 153) here which we have yet to digest. The government is not paid by the word so we are not sure why this is so wordy. I guess anticipating fights with crafty private sector defense attorneys! As always the devil is in the details and the specific wording and interpretation of the rule by the FTC is key. Once of the issues of interest to us is bike and recreational product companies love to use "paid" athletes to post reviews about product (along with endorsements of the product on their private social media accounts like Instagram and the like). I am assuming that those people would be considered "agents" under the rule. (unfortunately the rule itself does not define "agent") Given that understanding this is the FTC's bullet point (one of many):
Insider Reviews and Consumer Testimonials: The final rule prohibits certain reviews and testimonials written by company insiders that fail to clearly and conspicuously disclose the giver’s material connection to the business. It prohibits such reviews and testimonials given by officers or managers. It also prohibits a business from disseminating such a testimonial that the business should have known was by an officer, manager, employee, or agent. Finally, it imposes requirements when officers or managers solicit consumer reviews from their own immediate relatives or from employees or agents – or when they tell employees or agents to solicit reviews from relatives and such solicitations result in reviews by immediate relatives of the employees or agents.
There is sure to be a thorough examination of product reviews and reviewers going forward as well as the process involved in making sure this rule is followed and we all know who is looking at this carefully...Amazon and other big retailers.
Hopefully in the coming weeks we will be adding more to this post above.
