SUMMARY
- FTC's proposed rule seeks to ban practices such as purchasing, selling, and concealing negative reviews.
- This rule aims to prevent 'review repurposing' and mandates disclosure of affiliations by company executives when reviewing their own products.
- The rule's enforcement could potentially even the playing field for virtuous businesses by imposing civil penalties on violators.
The Federal Trade Commission (FTC) unveiled a proposal on Friday aimed at outlawing deceitful online testimonials, thus marking a radical escalation in its fight against online review manipulation.
The suggested regulation will restrict businesses from buying, selling or obscuring negative feedback. It also addresses 'review repurposing', a devious practice where a positive review is applied to various listings, thereby making unfamiliar or dubious products appear credible. Moreover, the rule mandates that insiders or executives of a company must disclose their affiliations when they comment on their products or services.
Samuel Levine, the director of FTC’s Bureau of Consumer Protection, stated, "By enforcing civil penalties on those violating the rule, we aim to even the playing field for virtuous businesses."
Online review manipulations, whether they be fake reviews or review abuses, continue to plague digital platforms like Amazon, Google, and Yelp. It's often observed that malevolent players take advantage of such misleading reviews to manipulate search engine rankings, leading to enhanced sales. The darker side of this issue includes companies paying users to drop negative feedback on rivals' products, a practice known as 'review sabotage.'
As the problem of review fraud grows, an illicit online ecosystem has emerged offering to generate phony reviews for a nominal fee. The marketplace for these unlawful services ranges from public websites to exclusive Facebook groups and Telegram chats.
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