On June 30, the FTC announced that it had issued a new notice of proposed rulemaking that addresses fake reviews and testimonials.  The rule prohibits practices the Commissioners have identified as problematic in public statements for the past several years.  For instance, when announcing the review of the Endorsement Guides over a year ago, Chair Khan noted that “consumers’ increasing reliance on online reviews can also incentivize advertisers to harness fake reviews, suppress negative reviews, and amplify positive ones.”  The proposed rule covers a variety of topics including fake reviews, review hijacking, purchasing reviews, employee reviews, review suppression, and the use of fake indicators of social media influence.  Several of the new provisions track principles set forth in prior FTC cases, or target specific practices previously identified in the Endorsement Guides.  Below we’ve summarized the requirements in the proposed rule.  The NPRM will be open for public comment for 60 days once it is posted in the federal register.  As of today, it has not yet been posted.

  • Definitions.  The NRPM contains several new definition provisions.  It also adopts the definition of “clear and conspicuous” for disclosures that the FTC previously proposed in its negative option rulemaking.
    • Celebrity Testimonial: an advertising or promotional message (including verbal statements, demonstrations, or depictions of the name, signature, likeness, or other identifying personal characteristics of an individual) that consumers are likely to believe reflects the opinions, beliefs, or experiences of a well-known person who purchased, used, or otherwise had experience with a product, service, or business.  This definition tracks the definition of “endorsement” from the Endorsement Guides, as applied to a celebrity.
    • Consumer Testimonial: uses the same definition as “celebrity testimonial,” but for a non-celebrity.
    • Consumer Review: a consumer’s evaluation, or a purported consumer’s evaluation, of a product, service, or business that is submitted by the consumer or purported consumer and that is published to a website or platform dedicated in whole or in part to receiving and displaying such evaluations.  This includes ratings, whether or not they include any text.  This definition includes “purported consumer evaluations,” and thus encompasses fake reviews.  The definition does not include social media posts or blog posts, because they are not submitted to a website or platform dedicated to reviews.
    • Indicators of Social Media Influence: any metrics used by the public to make assessments of an individual’s or entity’s social media influence, such as followers, friends, connections, subscribers, views, plays, likes, reposts, and comments.
    • Purchase a Consumer Review: provide something of value, such as money, goods, or another review, in exchange for a consumer review.
    • Substantially Different Product: a product that differs from another product in one or more material attributes other than color, size, count, or flavor. 
  • Fake or False Consumer Reviews, Consumer Testimonials, or Celebrity Testimonials. This proposed provision has three subparts that prohibit a business from: (1) writing, creating or selling consumer reviews/testimonials or celebrity testimonials if the reviewer/testimonialist does not exist, did not use or have experience with the product/service/business that is the subject of the review/testimonial, or the review/testimonial otherwise materially misrepresents the reviewer/testimonialist’s experience; (2) purchasing consumer reviews, or disseminating or causing the dissemination of a consumer/celebrity testimonial, about the business or its products/services if the business knew or should have known the reviewer/testimonialist did not exist, did not use or have experience with the product/service/business that is the subject of the review/testimonial, or the review/testimonial otherwise materially misrepresents the reviewer/testimonialist’s experience; and (3) procuring consumer reviews for posting on a third party platform/website about the business or its products/services if the business knew or should have known the reviewer did not exist, did not use or have experience with the product/service/business that is the subject of the review, or the review otherwise materially misrepresents the reviewer’s experience.  Importantly, the FTC explains that this section “does not apply to businesses, like third-party review platforms, that disseminate consumer reviews that are not of their products, services, or businesses.  Neither does it apply to any reviews that a platform simply publishes and that it did not purchase.”
  • Consumer Review Repurposing. This section prohibits using or repurposing consumer reviews written for one product so that it appears to have been written for a substantially different product, as well as to cause such use or repurposing.  This provision targets so-called “review hijacking.”  The FTC specifically states in the commentary to the proposed rule that differences in flavor are likely to be material in some instances, but the question can be highly fact specific.  Accordingly, although the proposed rule does not prohibit combining reviews for multiple flavors, this practice could still be deceptive under the FTC Act.
  • Buying Positive or Negative Consumer Reviews.  This proposed section prohibits providing compensation/incentives conditioned on the writing of a consumer review expressing a particular sentiment, whether positive or negative.
  • Insider Consumer Reviews and Consumer Testimonials.  This provision deals with employee reviews, and appears to target the type of conduct challenged in the FTC’s Sunday Riley case.  It proposes to prohibit: (1) officers/managers of a business from writing consumer reviews/testimonials about the business or its products/services that do not clearly and conspicuously disclose their relationship to the business; (2) a business from disseminating (or causing the dissemination of) a consumer testimonial about the business or its products/services by one of its officers, managers, employees, or agents, or any of their relatives, which lacks a clear and conspicuous disclosure of that relationship when the business knew or should have known of that relationship; (3) officers/managers from soliciting or demanding consumer reviews about the business or its products/services from employees, agents, or relatives of any officer, manager, employee, or agent when the officer/manager knew or should have known of the relationship; the officer/manager did not instruct the reviewer to make a clear and conspicuous disclosure, knew or should have known that such a review appeared without a disclosure and failed to remedy the lack of disclosure, or encouraged the reviewer not to make a disclosure; and the solicitation/demand resulted in the reviewer writing a review without a disclosure.
  • Company-Controlled Review Websites or Entities.  This proposed section prohibits a business from representing that a website/organization/entity that it controls or owns provides independent reviews or opinions about a category of businesses, products, or services including the business or its products/services.  There is already an example in the new Endorsement Guides that addresses this practice.
  • Review Suppression.  This proposed section prohibits threatening unjustified legal action, physical threats, intimidation or false accusations in an attempt to prevent consumer reviews from being written or to cause a consumer review to be removed.  It also prohibits a business from misrepresenting that consumer reviews on its website or platform represent most or all reviews submitted when reviews are being suppressed based on ratings or negativity.  The section contains exceptions for reviews that meet certain criteria, which are drawn from the Consumer Review Fairness Act, so long as these criteria are applied to all reviews regardless of favorability.  This provision memorializes the position the FTC took in last year’s Fashion Nova case.
  • Misuse of Fake Indicators of Social Media Influence.  This final proposed section prohibits selling or distributing fake indicators of social media influence that can be used to misrepresent influence or importance for a commercial purpose.  It also prohibits purchasing or procuring fake indicators of social media influence to misrepresent influence or importance for a commercial purpose.  This proposed provision targets conduct like what was challenged in the FTC’s Devumi case.
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Photo of Laura Kim Laura Kim

Laura Kim draws upon her experience in senior positions at the Federal Trade Commission to advise clients across industries on complex advertising, privacy, and data security matters. She provides practical compliance advice and represents clients in FTC and State AG investigations. Ms. Kim…

Laura Kim draws upon her experience in senior positions at the Federal Trade Commission to advise clients across industries on complex advertising, privacy, and data security matters. She provides practical compliance advice and represents clients in FTC and State AG investigations. Ms. Kim advises on a wide range of consumer protection issues, including green claims, influencers, native advertising, claim substantiation, Made in USA claims, children’s privacy, subscription auto-renewal marketing, and other digital advertising matters. In addition, Ms. Kim actively practices before the NAD, including recent successful resolution of matters for both challengers and advertisers. She co-chairs Covington’s Advertising and Consumer Protection Practice Group and participates in the firm’s Internet of Things Initiative.

Ms. Kim re-joined Covington after a twelve-year tenure at the FTC, where she served as Assistant Director in two divisions of the Bureau of Consumer Protection, as well as Chief of Staff in the Bureau of Consumer Protection and Attorney Advisor to former Chairman William E. Kovacic. She worked on key FTC Rules and Guides such as the Green Guides, Jewelry Guides, and the Telemarketing Sales Rule. She supervised these and other rule making proceedings and oversaw dozens of the Commission’s investigations and enforcement actions involving compliance with these rules. Ms. Kim also supervised compliance monitoring for companies under federal court or Commission order.

Ms. Kim also served as Deputy Chief Enforcement Officer at the U.S. Department of Education, where she helped establish a new Enforcement Office within Federal Student Aid. In this role, she managed investigations of higher education institutions and oversaw issuance of fines and adverse actions for institutions in violation of federal student aid regulations. Ms. Kim also supervised the borrower defense to repayment division and the Clery campus safety and security division.

Photo of John Graubert John Graubert

John Graubert has more than 30 years of experience in a wide range of complex antitrust and consumer law matters. John came to the firm after serving for ten years as Principal Deputy General Counsel of the Federal Trade Commission. John is co-chair…

John Graubert has more than 30 years of experience in a wide range of complex antitrust and consumer law matters. John came to the firm after serving for ten years as Principal Deputy General Counsel of the Federal Trade Commission. John is co-chair of the firm’s Advertising and Consumer Protection practice group, an Adjunct Professor at the Georgetown University Law Center, and a vice-chair of the Federal Civil Enforcement Committee of the ABA Antitrust Section.

From 1998-2008, John served as Principal Deputy General Counsel (including several stints as Acting General Counsel) at the Federal Trade Commission. In that position John managed all litigation, legal counsel, policy studies, and administrative functions within the Office of General Counsel. He also advised the Commission and agency staff on antitrust and consumer protection matters and administrative law. He was involved in dozens of litigated matters for the Commission, including FTC v. Swedish Match, et al. (D.D.C. 2000) and FTC v. Schering-Plough, et al. (11th Cir. 2005), and received the A. Leon Higginbotham Award and the Award for Distinguished Service.

Photo of Alexandra Remick Alexandra Remick

Alexandra Remick is a member of the Advertising and Consumer Protection Group. Her practice focuses on regulatory and compliance matters related to consumer protection. She has experience advising clients on topics including endorsements, social media influencers, native advertising, automatically renewing subscriptions, consumer reviews…

Alexandra Remick is a member of the Advertising and Consumer Protection Group. Her practice focuses on regulatory and compliance matters related to consumer protection. She has experience advising clients on topics including endorsements, social media influencers, native advertising, automatically renewing subscriptions, consumer reviews, and claim substantiation in a variety of contexts. She frequently provides advice on specific advertising compliance questions and works with companies on developing internal advertising compliance policies. She has also represented multiple clients in FTC investigations involving consumer protection issues, has conducted regulatory due diligence on multiple transactions, and has drafted comments on multiple rulemakings.