Fresh on the heels of its newly released Endorsement Guides, and perhaps indicating that, like the rest of us, FTC Commissioners are also ready to close their laptops and get to the holiday weekend, the FTC today released a notice of proposed rulemaking related to fake reviews and testimonials. While deceptive consumer reviews are already unlawful under Section 5 of the FTC Act, the FTC emphasizes that the proposed rule is designed to help increase deterrence by allowing the Commission to seek civil penalties for violative practices.

The entire text of the rule can be found here, but a few highlights are:

• It is deceptive to write or sell fake reviews or testimonials – “fake” means written by a person who doesn’t exist, doesn’t have experience with a product, or is misrepresenting their experience with a product. Notably, the “selling” part implicates those businesses that provide reviews for companies to use (such as review aggregators).
• Proposed § 465.4 would make it “an unfair or deceptive act or practice and a violation of this Rule for a business to provide compensation or other incentives in exchange for, or conditioned on, the writing or creation of consumer reviews expressing a particular sentiment, whether positive or negative.” This section serves as a reminder never to direct reviewers or testimonialists to say something specific about a product; an incentive may be fine but directing that the reviewer will only get that incentive if their review is positive is not.
• Businesses cannot write or disseminate customer testimonials reviews by officers, managers, employees, agents, or any of their relatives, without a clear disclosure identifying the reviewer’s relationship to the business, or to someone at the business. The rule, as written, says that this relationship must be disclosed if the business knows or “should have known” about the relationship – a potentially high bar for relatives of employees.
• Businesses may not use a review written about one product and apply that review to a totally different product. This practice, known as “review hijacking,” is the subject of a recent FTC action, the first of its kind.
• Businesses would be prohibited from creating or controlling a website that claims to provide independent opinions about a category of products or services that includes its own products or services.

By codifying these and other issues included in the proposed rule, the FTC is again (as it has with its multiple rounds of notice of penalty offenses) signifying its intention to find ways of strengthening its ability to bring actions that include the possibility of civil penalties in the wake of AMG Capital Management LLC v. FTC.

The public now has 60 days to provide comments, and we expect a robust debate on the proposed definitions of, and the breadth of the prohibitions in, the rule.