Online reviews and testimonials are crucial for small businesses looking to attract new customers and boost sales. However, fake reviews have long been a significant problem, undermining trust and damaging reputations. Many small businesses, like Avi Israeli’s Sage Dental in Wall, N.J., have struggled with fake and erroneous reviews, often posted by individuals with no connection to the business or by those confusing the business with similarly named competitors.
In response to the growing issue, the Federal Trade Commission (FTC) has introduced a new rule aimed at combating fake reviews. Effective October 21, the rule prohibits the sale and purchase of fake reviews and testimonials, and enables the FTC to impose civil penalties on those knowingly involved in such practices.
FTC Chair Lina M. Khan emphasized that fake reviews distort the marketplace, waste consumers’ time and money, and unfairly disadvantage honest competitors. The new regulation specifically targets reviews and testimonials that are fabricated, whether they are AI-generated, from non-existent persons, or from individuals who have not experienced the business or product in question. It also prohibits the creation or sale of fake reviews by businesses and bans the trading of fake social media metrics, such as followers or views from bots.
Tanya Lamont, CEO of Conversational in Dallas, Texas, recounted how her company was negatively impacted by fake reviews that criticized staff professionalism and mishandling of client information. Despite responding to the reviews and reporting them to the respective platforms, the damage led to a significant drop in new client inquiries and revenue. Lamont views the FTC’s crackdown as a vital measure for protecting businesses that depend heavily on their online reputations.
Businesses affected by fake reviews are encouraged to report issues to the FTC through ReportFraud.ftc.gov. The new rule represents a significant step towards ensuring fairer online business practices and safeguarding the integrity of consumer reviews.
I am Aparna Sahu
Investment Specialist and Financial Writer
With 2 years of experience in the financial sector, Aparna brings a wealth of knowledge and insight to Investor Welcome. As an accomplished author and investment specialist, Aparna has a passion for demystifying complex financial concepts and empowering investors with actionable strategies. She has been featured in relevant publications, if any, and is dedicated to providing clear, evidence-based analysis that helps clients make informed investment decisions. Aparna Sahu holds a relevant degree or certification and is committed to staying ahead of market trends to deliver the most up-to-date advice.
