Consumer Reviews & Testimonials

I posted in November 2022 about the FTC preparing New Regulations on Endorsements and Testimonials. Yesterday they announced their final rule on this matter, which now becomes part of the Code of Federal Regulations (it’s 16 CFR 465).

After reading the 57,000 word (yes, 57,000 words – the size of a small book) discussion in the Federal Register of why they did what they did, I can now give you a simplified summary of what the new rule entails, and what it might mean to you.

Purpose

Since more and more people rely on online reviews and testimonials as a way to make buying decisions, more and more people and companies are finding ways to game the system. Basically, the purpose of the new rule is to prohibit some of the possible unfair or deceptive practices involving consumer reviews or testimonials.

The rules are in terms of what is “unfair or deceptive” because the Federal Trade Commission Act (the law) prohibits “unfair or deceptive acts or practices in or affecting commerce.” A rule/regulation defining something as “unfair or deceptive” means that the FTC now has the power to take action against it because it falls under the prohibited acts of the FTC Act.

Definitions:

Consumer Review

A consumer’s (or purported consumer’s) evaluation of a product, service, or business that is submitted by the consumer (or purported consumer) and published to a website or platform that receives and displays such evaluations. It includes reviews and ratings, regardless of whether they include text (so just clicking 5 stars would count as a review).

Testimonial

An advertising or promotional message that consumers are likely to believe reflects the opinions, beliefs, or experiences of a consumer who has actually purchased, used, or otherwise had experience with a product, service, or business. It could include verbal statements, demonstrations, or depictions of the name, signature, likeiness, or other identifying characteristics of an individual.

A Consumer Testimonial is a testimonial by a regular consumer of the product, service, or business.

A Celebrity Testimonial is a testimonial by a well-known person (including an “influencer”).

Fake Reviews or Testimonials

It seems sad to need regulations saying that fake reviews or testimonials are prohibited, but apparently we do.

A fake review or testimonial is one that:

• States or implies that the reviewer or testimonialist exists when they don’t actually exist;
• States or implies that the reviewer or testimonialist has experience with the product, service or business being reviewed when they don’t have experience with it; or
• Misrepresents what the actual experience with the product, service or business actually is.

It’s officially considered unfair or deceptive for a business to write, create, or sell a fake review or testimonial.

It’s also unfair or deceptive for a business to purchase a consumer review or to disseminate a consumer or celebrity testimonial that they knew or should have known was false in one of the ways listed above.

Finally, it’s unfair or deceptive for a business to procure a consumer review from its officers, managers, employees, or agents, or any of their immediate relatives that is false in any of the ways above. That includes not disclosing the relationship with the product, service, or business.

What to watch for:

Well, obviously, don’t post any fake reviews about your own or someone else’s products.

If there is a special relationship between the reviewer or testimonialist and the product, it needs to be disclosed.

• If you post a review or testimonial about one of your products, you must disclose somehow that it’s your company and product.
• If an employee posts a review or testimonial about one of your products, they must disclose somehow that they are employed by the company.
• If your (or an employee’s) immediate family member posts a review or testimonial about one of your products, they must disclose somehow that they are related to you or the emplolyee.

It can be as simple as “My mom makes this …” or “The company I work for makes …” And, of course, the review or testimonial must be true and based on actual experience of using the product!

Suppressing Reviews

It’s considered unfair or deceptive to suppress reviews.

You can’t use threats or intimidation in response to a review to try to prevent the review from being written or posted, or to try to get all or part of the review removed (even if part of it is replaced by something else).

If you are displaying ratings and/or reviews, you must display all of them fairly. In other words, you can’t display only the good reviews or set it up so that the bad reviews are displayed, but in a way that they are never seen.

What to watch for:

Not suppressing reviews doesn’t mean that you must display every review your receive. There are times when you need to suppress a review, such as when the review contains defamatory, abusive, obscene, or vulgar language, personal information is included, discriminatory content, false or deceptive contents, or you are pretty sure the review is fake.

You just have to do it fairly, not based on the sentiment of the review. Have a policy in place on what type(s) of reviews you might need to suppress, and then follow the policy regardless of whether the review is good or bad.

In fact, you have an obligation to remove reviews that are “false or deceptive” … which means for cosmetics, you must remove any reviews that make claims for the product that are not allowed. If someone posts a review of how your cream cured their eczema or cancer, you cannot display that review because it makes makes claims that your product is an unapproved new drug (and thus illegal). It doesn’t matter if the review is positively glowing or a 1/2 star derogatory remark — take it down.

Buying positive or negative consumer reviews

It’s prohibited to purchase positive or negative consumer reviews. I’d assume that means positive reviews for your products or business, or negative reviews for a competitor.

In this case, “purchase” means any sort of valuable exchange, compensation, or incentives (stated or implied) for writing a review with a certain sentiment.

What to watch for:

Don’t offer incentives that look like they are for a certain type of review. For example, “Tell us how much you loved this product and get a coupon for 10% off!” implies that they get the coupon only if they say something positive.

Company controlled review websites

Have you ever done an online search for “consumer reviews of ______” only to end up at a website giving supposedly “unbiased” reviews of various products — only to find out that the website is actually owned by (oh, surprise!) the company that makes the top rated product?

Under these new rules, it’s considered unfair or deceptive for a business to misrepresent that website, organization or entity they own or control provides “independent” reviews or opinions. (At the very least, they must disclose it.)

What to watch for:

Don’t create another website to make “independent reviews” of your products versus other similar products.

Effective Date

This rule is effective as of October 21, 2024.