US FTC finalizes ban on companies buying and selling fake online reviews (updated)

Yelp

14/08/2024 22:08

(Adds comment from Yelp, context in paragraphs 6-8)
    By Jody Godoy
       Aug 14 (Reuters) - The U.S. Federal Trade Commission on
Wednesday finalized a ban on companies knowingly buying or
selling fake online reviews, giving the agency the power to levy
fines against the shadowy practice.
    The ban covers trafficking in fake reviews, whether by
non-existent customers, company insiders or artificial
intelligence. It also prohibits buying and selling fabricated
views or followers on social media, and using intimidation
tactics to remove negative reviews.
    The FTC can seek a maximum penalty of up to around $51,744
per violation.
    "Fake reviews not only waste people's time and money, but
also pollute the marketplace and divert business away from
honest competitors," FTC Chair Lina Khan said in a statement.
    The rule does not require platforms that simply publish
consumer reviews to verify their veracity.
    The rule garnered some support and input from trade groups
and businesses, including Alphabet's  GOOGL.O  Google,
Amazon.com Inc  AMZN.O  and review site Yelp  YELP.N .
    Yelp General Counsel Aaron Schur welcomed the rule in a
statement on Wednesday, saying the company had long prohibited
the practices the rule bans.
    "We believe the enforcement of this new rule will improve
the review landscape for consumers and help level the playing
field for businesses," he said.
    Teresa Murray, a consumer advocate at U.S. Public Interest
Research Group, said the rule was an important protection for
online shoppers, 90% of whom base purchase decisions in part on
reviews.
    "We hope this puts fear in companies so they do the right
thing, even if it's just because they're afraid of the
consequences," Murray said.

 (Reporting by Jody Godoy in New York; Editing by Jonathan Oatis
and Jamie Freed)
 ((Jody.Godoy@thomsonreuters.com;))