On October 20, 2022, the Federal Trade Commission (“FTC”) voted 3-1 at an Open Commission meeting to issue an Advanced Notice of Proposed Rulemaking (“ANPR”) on the Use of Reviews and Endorsements. The ANPR seeks public comment on “certain clearly deceptive or unfair practices,” including the following topics:
- Fake reviews, which include reviews posted by people who do not exist, have not used the product or service, or who lie about their experience with the product.
- Review reuse fraud, which would include reviews that were originally posted for a different product or service and then “repurposed” for a different product or service.
- Paid reviews, which includes purchasing positive reviews for the company’s products and purchasing negative reviews for s competitors’ products.
- Insider reviews, such as reviews posted by a company’s employees who do not disclose their connection to the company.
- Negative review suppression, both on the company’s own ecommerce platform and third-party platforms.
- Fake review websites, such as a website the seller sets up that appears to provide independent reviews of the seller’s products.
- Buying followers, subscribers, views, or other indicators of social media influence.
These recent actions indicate that the FTC is willing to institute enforcement actions against actors for use of deceptive reviews or endorsements, but the FTC’s insistence on new rulemaking indicates a belief that targeted enforcement is not an effective way to stop harmful industry practices post-AMG, in which the Supreme Court held that Section 13(b) of the FTC Act does not authorize the Commission to obtain equitable monetary relief. Indeed, Chair Khan stated that “A rule against fake reviews could enable us to obtain civil penalties and return money to consumers injured as a result of deceptive or unfair reviews and endorsements.” On the other hand, Commissioner Wilson’s dissent noted the high opportunity cost of another rulemaking effort—noting that the FTC is on track for less than half as many consumer protection enforcement actions in 2022 than it had in 2020, which she blames on the six new rules proposed for consumer protection in 2022. In her oral remarks during the Open Commission Meeting, Commissioner Wilson described the FTC’s rulemaking agenda as “Rule-a-Palooza”, acknowledging the “massive regulatory undertakings. . . require substantial FTC resources.”
The text of the FTC’s Advanced Notice of Proposed Rulemaking, titled “Trade Regulation Rule on the Use of Reviews and Endorsements” can be found here. Interested parties are encouraged to submit comments to the Proposed Notice Rule within 90 days after the date of publication in the Federal Register.