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US Agency Set to Crack Down on Fake Online Reviews with a $50,000 Blow

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WASHINGTON DC, USA – The Federal Trade Commission (FTC) unveiled an aggressive proposal on Friday, June 30, 2023, to clamp down on the pervasive issue of fraudulent online reviews.

The proposed rules could see businesses slapped with fines of up to $50,000 for each counterfeit review viewed by consumers.

In what is being heralded as the most significant federal effort to curb the illicit trade in fake reviews, the FTC aims to tackle businesses that create, disseminate, or manipulate online reviews.

However, critics argue that the new rules do not sufficiently hold major review platforms such as Yelp, Google, TripAdvisor, and Amazon accountable.

“Anyone who’s done any shopping online knows that trying to actually get objective information about the product is so fraught because there’s so much commercial misinformation, so many deceptive reviews,” stated Samuel Levine, director of the FTC’s Bureau of Consumer Protection.

Consumer advocacy groups and researchers, including U.S. PIRG, estimate that a staggering 30 to 40 percent of online reviews are fraudulent or inauthentic, though this varies depending on the product and platform. The growing accessibility of advanced artificial intelligence systems like ChatGPT, which can mimic human writing, adds fuel to the fire.

Previously, the FTC addressed fake reviews through individual lawsuits. The newly proposed rules would establish clearer guidelines on liability and empower the FTC to act more decisively.

The rules prohibit reviews that misrepresent personal experience, and those created by nonexistent individuals.

Company insiders like employees are barred from writing reviews without full disclosure. The rules extend to middlemen and businesses that should have known the reviews they commissioned were fraudulent.

The proposal also targets dubious practices like review “hijacking,” where a merchant substitutes a different product on a page with legitimate reviews.

“It’s really important to deter the practice up front, so that the people or businesses that engage in these practices know that they could face a really heavy price,” explained Levine.

The FTC’s proposal would also allow it to recover funds on behalf of consumers harmed by fake reviews.

However, enforcing these rules could prove challenging, especially against overseas entities and without additional enforcement resources.

Critics argue that a more comprehensive approach is needed to address the fake-review economy as a whole. For instance, social media platforms like Facebook and Twitter are known breeding grounds for recruiting fake review writers.

Additionally, critics point out that review platforms like Amazon and Yelp exercise considerable control over the reviews they host, yet the proposed rules do not extend liability to these platforms unless they are directly involved in procuring fake reviews.

“Many of them assert immunity under Section 230 of the Communications Decency Act,” Levine added, referring to the legislation that exempts online forums from liability for content posted by others.

Platforms like Amazon and Yelp have reported measures to tackle fake reviews. In 2022, Amazon blocked over 200 million suspected fake reviews. Yelp identified 19 percent of reviews as “not recommended” through its software.

“We applaud the FTC’s proposed ruling to take action against fake reviews and testimonials and plan to share further comments on the proposed rule,” said Aaron Schur, Yelp General Counsel, in a statement.

However, some argue this is not enough. Kay Dean, from Fake Review Watch, stated, “In any given day, I can…find thousands of fakes myself without any automation. That’s just me alone — one person. They don’t have much incentive to self-police — there really are no repercussions.”

One suggestion for platforms is to be more transparent when taking down fake reviews. Saoud Khalifah, founder of Fakespot, suggests, “We deserve more data and more transparency into what led to review content being displayed.”

Levine emphasizes the importance of platforms taking action. “Regardless of the liability regime, it is in the interests of consumers and the businesses that use these platforms for them to be policing this problem better. They have the most visibility into what’s happening, they are in the best position often to stop it, and we want them to be doing more,” he said.

The proposed rules are open to public comment for two months before they can be ratified.

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