Fake online reviews and testimonials are a headache for small businesses, and they’re hoping the FTC can help
NEW YORK (AP) — Online reviews and testimonials are a key way for small businesses to attract new customers and increase product sales.
But fake reviews and testimonials are a persistent problem for small businesses, many of which rely on recommendations to do business. Fake reviews can make it harder for people to trust what they read online and ultimately hurt businesses. Additionally, small businesses can find themselves targeted by malicious actors who leave negative reviews.
Avi Israeli, a dentist and owner of Sage Dental in Wall, New Jersey, with 15 employees, said his business has been targeted by false and inaccurate comments from people unrelated to his practice. Additionally, people in other states have confused his practice with a similarly named chain and posted inaccurate comments that are difficult to remove.
“They have significantly tarnished our reputation and are unfortunately very difficult and expensive to remove,” he said.
To combat this problem, the Federal Trade Commission is taking action against those who post fake online reviews. It issued a final rule which prohibits their sale or purchase and allows the agency to seek civil penalties against knowing violators.
The rule goes into effect on October 21, 60 days after its publication in the Federal Register.
“Fake reviews not only waste people’s time and money, they also pollute the marketplace and drive businesses away from honest competitors,” said FTC Chairwoman Lina M. Khan. She added that the rule “will protect Americans from scams, warn companies that illegally exploit the system, and promote fair, honest, and competitive markets.”
Specifically, the rule prohibits reviews and testimonials that are attributed to people who don’t exist or are generated by AI, to people who don’t have experience with the company or the products/services, or that misrepresent their experience. It also prohibits companies from creating or selling reviews or testimonials. Companies that knowingly purchase fake reviews, obtain them from people inside the company, or distribute fake reviews will be penalized.
The rule also prohibits anyone from selling or buying fake indicators of influence on social media, such as followers or views generated by a bot or hacked account.
Tanya Lamont, CEO of Conversational, a virtual receptionist service in Dallas, Texas, with 20 employees, said her business has been affected by fake reviews that its staff lacks professionalism and mishandles sensitive customer information. That has led to a drop in new customer inquiries and some concerns among existing customers.
In an attempt to mitigate the damage, the company responded to each review, requested verification of reviewers’ claims, and reported the reviews to the platforms on which they were posted.
“Despite these efforts, the damage was already done, resulting in a temporary but significant decline in our revenue,” she said. She called the FTC’s crackdown a “must-have measure” for companies like hers that rely on their online reputation to attract and retain customers.
“We hope that stricter enforcement will help protect businesses from the harm caused by these malicious acts,” she said.
Affected businesses can also report their concerns to the FTC. Consumers or business owners can report fraud, scams, and poor business practices to ReportFraud.ftc.gov.
