The Federal Trade Commission (FTC) says it is ready to hold companies that use fake reviews to account, including by seeking financial damages, according to an FTC announcement published Thursday.
"The rise of social media has blurred the line between authentic content and advertising, leading to an explosion in deceptive endorsements across the marketplace. Fake online reviews and other deceptive endorsements often tout products throughout the online world," the announcement reads.
The FTC says it has sent a notice to more than 700 companies, telling them they could face penalties of up to $43,792 per violation for using fake reviews. The notice mentioned a number of practices that the FTC has previously determined to be unfair or deceptive, such as falsely claiming an endorsement from a third party; misrepresenting whether an endorser is a current, recent, or actual user; and misrepresenting that the experience of endorsers is consumers' typical experience, the announcement added.
"Fake reviews and other forms of deceptive endorsements cheat consumers and undercut honest businesses," Samuel Levine, director of the FTC’s bureau of consumer protection, said in the announcement. "Advertisers will pay a price if they engage in these deceptive practices."
The companies receiving the notice include huge American corporations like Activision Blizzard, AT&T, Burger King, Dunkin' Donuts, Hulu, Macy's, Ralph Lauren, Sony, and Wendy's. Inclusion on the list is not an indication that the company has done anything wrong, but the FTC has sent the notice far and wide, including "large companies, top advertisers, leading retailers, top consumer product companies, and major advertising agencies," the announcement adds.
An entire industry of so-called reputation management companies exists. While some may work legitimately, others may deploy inauthentic reviews to bolster a client's image; in other cases, they may work to try and remove negative reviews.