In an era dominated by digital platforms and online consumer reviews, the Federal Trade Commission (FTC) has taken a step toward ensuring fairness, transparency, and honesty in marketing and employee reviews. The proposed rule seeks to curtail deceptive practices that undermine consumer trust and honest businesses’ credibility. Samuel Levine, Director of the FTC’s Bureau of Consumer Protection expressed the purpose and importance of the rule: “Our proposed rule on fake reviews shows that we're using all available means to attack deceptive advertising in the digital age. The rule would trigger civil penalties for violators and should help level the playing field for honest companies.”
Categories of Deceptive and Unfair Practices Targeted by FTC
- Fake Consumer Reviews and Testimonials
The proposed rule explicitly prohibits businesses from generating or selling consumer reviews from non-existent individuals or those who misrepresent their experiences with a product or service. It also forbids businesses from procuring such fake reviews knowingly.
- Review Hijacking
To prevent misrepresentation, businesses are barred from repurposing consumer reviews written for one product to appear as though they were for another different product.
- Buying Positive or Negative Reviews
Companies are forbidden from offering compensation or incentives for writing consumer reviews that express a particular sentiment, whether positive or negative.
- Insider Reviews and Consumer Testimonials
The proposed rule demands transparency from company officers and managers who write reviews or testimonies for their own products or services. Such reviews must clearly disclose their relationships. Additionally, businesses cannot disseminate testimonials by insiders without similar disclosure.
- Company Controlled Review Websites
Companies are not allowed to create or control websites claiming to provide independent opinions about products or services, including their own. This prevents businesses from misleading consumers into thinking they are reading unbiased reviews.
- Illegal Review Suppression
Unjustified legal threats, intimidation, or false accusations to remove negative consumer reviews are prohibited. This rule ensures that consumers have access to honest opinions.
- Selling Fake Social Media Indicators
Businesses cannot sell false indicators of social media influence, such as fake followers or views, for commercial purposes. This rule maintains the credibility of online influence metrics.
Employee Reviews and Endorsements
The FTC’s proposed rule also has implications for employee reviews and endorsements of their own company’s products or services. Here’s a breakdown of how this rule applies:
- Is it permissible for employees to mention and provide online reviews of company’s products? Yes, employees can review and mention their company’s products or services online. However, they must disclose their relationship with the company. Merely listing the employer in their profile isn’t sufficient; they should explicitly state, “My company” or “My employer” in their review or endorsement.
- Is it acceptable for employers to request that employees endorse company products online? Yes, employers can ask employees to generate buzz about their products or services online. However, employers must ensure that employees only provide accurate information and do not make false claims. Furthermore, employers should instruct employees to disclose their relationship with the company whenever they endorse or review the products or services.
- What instructions should employers provide to their employees, and what degree of disclosure is necessary? Employers should instruct their employees to be as transparent as possible about their affiliation with the company when reviewing or endorsing products. Using terms like “My company” or “My employer” makes the relationship clear. The FTC places a high premium on disclosure, and it’s essential that employees comply with these guidelines to maintain trust and credibility.
- Are employees allowed to engage with company posts on their personal social networks by liking or sharing them without disclosing their affiliation? Whether employees need to disclose their relationship when liking or sharing company posts on personal social networks depends on the content. If the post is similar to an advertisement or promotes a product or service, employees should include a disclosure.
Tell the Truth
The FTC’s proposed rule on marketing and employee reviews underscores the importance of disclosure in the digital age. By targeting deceptive practices and emphasizing the need for transparency, this rule aims to protect consumers and ensure fair competition among businesses. The critical takeaway here is the significance of disclosure- employers and employees alike must recognize its role in maintaining trust and credibility in the online world. To navigate these regulations effectively and ethically, businesses should consider consulting Catalyst Legal professionals, who can provide guidance on compliance and best practices. Remember, telling the truth is always the best practice!