FTC Cracks Down on Inauthentic Online Review Practices: What Businesses Need to Know

In today’s competitive business landscape, inauthentic online review and marketing practices have unfortunately become all-too-common. This includes toxic strategies like purchasing fake reviews, soliciting reviews from employees and non-customers without disclosing their connection to the business, and intentionally hiding negative reviews from websites and review platforms.

To push back against these practices, the Federal Trade Commission (FTC) is cracking down to support a fairer system for brands and consumers alike.

What Is the Federal Trade Commission?

The FTC is a government agency tasked with protecting U.S. consumers by combating deception in advertising. They leverage law enforcement, rulemaking, collaboration with others, and education to keep businesses informed and consumers safe.

In January 2022, the FTC issued a Notice of Penalty Offenses to over 700 organizations that were knowingly participating in an activity known as “review gating,” which involves soliciting reviews and intentionally publishing only the most positive responses. They also released guidelines for brands and digital marketers on the best ways to fairly manage online review collection, moderation, publishing, and other related brand reputation management strategies.

Mike Atleson, an FTC attorney, says, “Consumers should be able to trust that reviews reflect the honest opinions of actual customers. But some businesses abuse that trust by writing or procuring fake or deceptive reviews, including reviews that tout their own products or slam those of honest competitors.”

With these regulations in place, the FTC aims to give people the peace of mind that disingenuous online reviews will no longer be tolerated.

Violating FTC Guidelines Can Result in Big Penalties

Federal legislation gives the FTC full power to stop and penalize parties that use “unfair or deceptive acts or practices in or affecting commerce.” Some businesses face steep, costly penalties for these actions.

As a consumer watchdog, the FTC can initiate lawsuits against businesses that knowingly hide negative reviews or publish false reviews. Retail and consumer goods businesses are getting the brunt of these penalties today, but the distribution of big fines is likely to spread to local businesses and service providers soon.

Recently, this exact situation resulted in a lawsuit against online retailer Fashion Nova. The company was charged with using software to intentionally block thousands of negative product reviews from 2015 to 2019. Ultimately, they were forced to pay a $4.2 million settlement.

Ten review platforms also received letters from the FTC, primarily due to product descriptions on their websites that are in direct violation of best practices for collecting, moderating, and publishing reviews. Several of the sites were advertising a “second chance to make a first impression” feature, which allows businesses to see negative reviews and try to reconcile any issue before they’re publicly visible.

How to Avoid Unwanted Attention from the FTC?

Simple. Follow the FTC’s rules—and stay honest!

From climbing up the online search rankings to convincing a buyer to choose their product or service, it’s easy to understand why brands want lots of positive reviews—and most do build their reputation honestly.

However, those taking shortcuts have a far-reaching effect that harshly impacts upstanding organizations. If consumers can’t distinguish legitimate reviews from false ones, they’ll grow distrustful of them all.

To grow a positive online reputation and top ratings “the right way,” just follow the FTC’s lead.

Two newly released guides—one for businesses soliciting or paying for reviews and one for review management platforms collecting, moderating, and publishing reviews—provide direction on the proper process.

You can download both FTC guides here: Guide for Businesses | Guide for Marketers

While the guide for businesses goes into significant detail on responsibly soliciting and leveraging reviews, both generally outline the same key parameters:

• Be transparent about how reviews are handled
• Always identify any incentive or connections
• Put processes in place to spot fake or misleading reviews
• Develop effective reporting mechanisms for consumers and businesses

Use these four guardrails while building your reputation management strategy. Now, let’s take a closer look at these recommendations.

FTC Review Guidelines for Online Customer Reviews

The FTC encourages brands who solicit or pay for reviews to abide by rules that fall into three basic categories:

1. Don’t solicit reviews from unqualified or biased reviewers
   Businesses should never ask people to write reviews for a product or service they have never used. The FTC also explains that it’s unethical for businesses to ask staff members or personal connections, like friends and family, to submit reviews unless they explicitly disclose their affiliation in the review itself.
2. Ask all customers for reviews, not just those most likely to leave positive ratings. 
   The FTC has no problem with a business prompting customers to leave reviews—as long as said prompting isn’t selective.
   They further note the unfairness of exclusively requesting reviews from clearly happy customers. They also frown upon discouraging disgruntled customers from leaving reviews—as should every business leader for perhaps surprising reasons.Bad reviews, in moderation of course, are actually great for businesses! Instead of resisting them, genuinely reply to every negative review.

   Believe it or not, too many positive reviews hurt conversion rates with one study showing that 95% of consumers distrust brands without negative reviews. Furthermore, 85% of consumers specifically seek out negative reviews. Why? Because seeing opinions on the pros and cons helps them make an informed buying decision.

3. Don’t add conditions to incentives
   If a business offers incentives in exchange for reviews, the incentive should be given regardless of how the customer rates the brand. Reviewers should also disclose in the review that they received an incentive in exchange for a review, as knowing this may change a potential buyer’s opinion on the review’s credibility.

FTC Review Guidelines for Platforms

The FTC’s platform guidelines are divided into three categories—review collection, review moderation, and review publishing. Their review collection recommendations are nearly identical to those discussed in the ‘for marketers’ section above, so we’ll move on to moderation.

Review Moderation

Moderation filters out fake reviews or reviews violating company policies (e.g., obscenities or harassment). How businesses moderate reviews can vary based on size, business model, and resources. Some common review moderation practices include reputation management platforms, outsourcing a white-glove review response service, manual review moderation, or a combination of techniques.

Review platforms also have built-in tools to help businesses manage this process on third-party sites. For example, Google uses machine learning to help spot inauthentic reviews. They also allow businesses to flag reviews that don’t meet their platform requirements.

Regardless, these best practices for online review fairness and honesty apply to all companies:

1. Create a process to verify that reviews are genuine, and not fake, deceptive, or otherwise manipulated.
2. Don’t edit reviews to alter the message. Never change words to make a negative review sound more positive.
3. Treat positive and negative reviews equally. Avoid subjecting negative reviews to greater scrutiny.

Review Publishing Guidelines

Businesses are often selective about what reviews they publish and what they display prominently on their website. The FTC provides these guidelines on deciding which reviews to publish:

1. Publish all legitimate reviews. Don’t exclude negative ones.
2. Don’t visually prioritize some reviews over others (e.g., have a prominent display of 5-star reviews and hide 1-star reviews).
3. Always disclose any incentive for writing a review
4. Openly define, in detail, how the company collects, processes, and displays reviews and how an overall rating is determined.
5. Have consistent, effective processes in place to spot fake or suspicious reviews. Investigate any reviews that are flagged by a consumer or business.

The FTC’s guiding principles are straightforward. But for an already busy company, implementing effective processes to follow those principles might feel overly challenging, and abiding is easier said than done. That is, unless you use the right tools to manage your brand reputation.

Online Review Software Can Keep You on the FTC’s Good Side

With these stringent guidelines, it might make some wonder if online reviews are even worth it. The answer? Absolutely!

One study shows that 97% of consumers said online reviews influence their buying decisions, and 91% of consumers ages 18-34 trust online reviews as much as personal recommendations. A ReviewTracker study also showed that consumers are 45% more likely to engage with a brand that is responsive to feedback.

There’s a lot to gain from playing an active role in building an honest online reputation. That being said, taking time every day to visit all your business’s review sites and look for new posts is a big undertaking. Coming up with good replies can also be tricky, especially if you’re dealing with a negative review. Luckily, reputation and review management software streamlines and simplifies this tedious task.

With the right reputation management tool, you can monitor and reply to every review on every review site on a single interface. Go further with features that notify teams when new reviews come in, track overall reputation scores, get suggestions for effective replies, and even respond to reviews in bulk.

With Chatmeter’s reputation management platform, you’ll experience all of that and more! Our user-friendly solutions and award-winning support team helps growing multi-location businesses build an authentic brand and earn consumer trust, all while staying in the FTC’s good graces.

Connect with one of our friendly team members to learn more, or take a free online brand visibility audit to see how you stand against the competition.