Trade Regulation Rule on the Use of Consumer Reviews and Testimonials

• Published date: 31 July 2023
• Record Number: 2023-15581
• Citation: 88 FR 49364
• Court: Federal Trade Commission
• Section: Proposed rules

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Federal Register / Vol. 88, No. 145 / Monday, July 31, 2023 / Proposed Rules

1

The Commission elects not to provide a

separate, second comment period for rebuttal

comments. See 16 CFR 1.11(e) (‘‘The Commission

may in its discretion provide for a separate rebuttal

period following the comment period.’’).

2

Fed. Trade Comm’n, ANPR: Trade Regulation

Rule on the Use of Reviews and Endorsements

(‘‘ANPR’’), 87 FR 67424 (Nov. 8, 2022), https://

www.federalregister.gov/documents/2022/11/08/

2022-24139/trade-regulation-rule-on-the-use-of-

reviews-and-endorsements.

3

The ANPR was entitled ‘‘Trade Regulation Rule

Concerning Reviews and Endorsements.’’ The

Commission has decided to change the name of the

proposed rule to ‘‘Trade Regulation Rule on the Use

of Consumer Reviews and Testimonials,’’ to better

reflect its content.

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For more information about this AD,

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Engineer, FAA, 2200 South 216th Street, Des

Moines, WA 98198; phone: (781) 238–7241;

email: sungmo.d.cho@faa.gov.

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AD 2023–0027, dated January 31, 2023.

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Issued on July 21, 2023.

Victor Wicklund,

Deputy Director, Compliance & Airworthiness

Division, Aircraft Certification Service.

[FR Doc. 2023–15910 Filed 7–28–23; 8:45 am]

BILLING CODE 4910–13–P

FEDERAL TRADE COMMISSION

16 CFR Part 465

RIN 3084–AB76

Trade Regulation Rule on the Use of

Consumer Reviews and Testimonials

AGENCY

: Federal Trade Commission.

ACTION

: Notice of proposed rulemaking;

request for public comment.

SUMMARY

: The Federal Trade

Commission (‘‘FTC or ‘‘Commission’’)

commences a rulemaking to promulgate

a trade regulation rule entitled ‘‘Rule on

the Use of Consumer Reviews and

Testimonials,’’ which would prohibit

certain specified unfair or deceptive acts

or practices involving consumer reviews

or testimonials. The Commission finds

such practices to be prevalent based on

the comments it received in response to

an advance notice of proposed

rulemaking and other information

discussed in this publication. The

Commission now solicits written

comment, data, and arguments

concerning the utility and scope of the

proposed trade regulation rule to

prohibit the specified unfair or

deceptive acts or practices.

DATES

: Comments must be received on

or before September 29, 2023.

ADDRESSES

: Interested parties may file a

comment online or on paper by

following the instructions in the

Comment Submissions part of the

SUPPLEMENTARY INFORMATION

section

below. Write ‘‘Reviews and

Testimonials NPRM, R311003’’ on your

comment and file your comment online

at https://www.regulations.gov. If you

prefer to file your comment on paper,

mail your comment to the following

address: Federal Trade Commission,

Office of the Secretary, 600

Pennsylvania Avenue NW, Suite CC–

5610 (Annex F), Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT

:

Michael Ostheimer, Attorney, Federal

Trade Commission, Bureau of Consumer

Protection, Advertising Practices

Division, (202) 326–2699, mostheimer@

ftc.gov.

SUPPLEMENTARY INFORMATION

: The

Commission invites interested parties to

submit data, views, and arguments on

the proposed Rule on the Use of

Consumer Reviews and Testimonials

(‘‘proposed Rule’’) and, specifically, on

the questions set forth in Section X of

this notice of proposed rulemaking

(‘‘NPRM’’). The comment period will

remain open until September 29, 2023.

1

To the extent practicable, all comments

will be available on the public record

and posted at the docket for this

rulemaking on https://

www.regulations.gov. If interested

parties request to present their position

orally, the Commission will hold an

informal hearing, as specified in Section

18(c) of the FTC Act, 15 U.S.C. 57a(c).

Persons interested in making a

presentation at an informal hearing

must file a comment expressly

requesting a hearing in response to this

publication, containing a statement

identifying their interests in the

proceeding and any proposals to add

disputed issues of material fact

necessary to be resolved during an

informal hearing. The comment should

describe why the person thinks the

informal hearing is warranted and how

they would participate, and include a

summary of their expected testimony.

Interested persons’ comments may also,

without requesting an informal hearing,

expressly request to speak at any

informal hearing that is held, which

may happen if another commenter

requests an informal hearing or if the

Commission on its own elects to hold

one. If an informal hearing is held, the

Commission will publish a separate

notice in accordance with 16 CFR

1.12(a) (‘‘initial notice of informal

hearing’’).

I. Background

The Commission published, on

November 8, 2022, an advance notice of

proposed rulemaking (‘‘ANPR’’) under

the authority of Section 18(a)(1)(B) of

the FTC Act, 15 U.S.C. 57a(a)(1)(B);

2

which authorizes the Commission to

promulgate, modify, or repeal trade

regulation rules that define with

specificity acts or practices that are

unfair or deceptive in or affecting

commerce within the meaning of

Section 5(a)(1) of the FTC Act, 15 U.S.C.

45(a)(1).

The ANPR described the

Commission’s history of educating

industry and consumers about the use of

deceptive reviews and testimonials and

of taking law enforcement action against

certain unfair or deceptive acts or

practices involving consumer reviews or

testimonials.

3

Specifically, the ANPR

discussed: (a) the use of reviews or

endorsements by people who do not

exist, who did not actually use or test

the product or service, or who were

misrepresenting their experience with

it; (b) review hijacking, where a seller

steals or repurposes reviews of another

product; (c) marketers offering

compensation or other incentives in

exchange for, or conditioned on, the

writing of positive or negative consumer

reviews; (d) owners, officers, or

managers of a company (i) writing

reviews or testimonials of their own

products or services, or publishing

testimonials by their employees or

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ANPR, 87 FR at 67427.

5

See 15 U.S.C. 57a(b)(3) (‘‘The Commission shall

issue a notice of proposed rulemaking pursuant to

paragraph (1)(A) only where it has reason to believe

that the unfair or deceptive acts or practices which

are the subject of the proposed rulemaking are

prevalent.’’).

6

The comments are publicly available on this

rulemaking’s docket at https://www.regulations.gov/

docket/FTC-2022-0070/comments.

7

Anonymous Cmt. on Trade Regulation Rule on

the Use of Reviews and Endorsements (‘‘Cmt. on

ANPR’’) (Nov. 15, 2022), https://

www.regulations.gov/comment/FTC-2022-0070-

0006 (‘‘Anonymous Consumer A Cmt.’’); Mahzer

Zaim, Cmt. on ANPR (Nov. 21, 2022), https://

www.regulations.gov/comment/FTC-2022-0070-

0008 (‘‘Zaim Cmt.’’); Jill Monday, Cmt. on ANPR

(Dec. 3, 2022), https://www.regulations.gov/

comment/FTC-2022-0070-0010 (‘‘Monday Cmt.’’);

Donald Kelly, Cmt. on ANPR, (Dec. 7, 2022),

https://www.regulations.gov/comment/FTC-2022-

0070-0012 (‘‘Kelly Cmt.’’); Heather Earl, Cmt. on

ANPR (Dec. 11, 2022), https://www.regulations.gov/

comment/FTC-2022-0070-0013; Andrea Sliger, Cmt.

on ANPR (Dec. 11, 2022), https://

www.regulations.gov/comment/FTC-2022-0070-

0014; Merrill Ahrens, Cmt. on ANPR (Dec. 11,

2022), https://www.regulations.gov/comment/FTC-

2022-0070-0015; Diane Dauite, Cmt. on ANPR (Dec.

11, 2022), https://www.regulations.gov/comment/

FTC-2022-0070-0016 (‘‘Dauite Cmt.’’); Stephanie

Smith, Cmt. on ANPR (Dec. 12, 2022), https://

www.regulations.gov/comment/FTC-2022-0070-

0017 (‘‘Smith Cmt.’’); Anonymous, Cmt. on ANPR

(Dec. 13, 2022), https://www.regulations.gov/

comment/FTC-2022-0070-0018 (‘‘Anonymous

Consumer B Cmt.’’); Jim Zevely, Cmt. on ANPR

(Dec. 17, 2022), https://www.regulations.gov/

comment/FTC-2022-0070-0019 (‘‘Zevely Cmt.’’);

Frank Evelhoch II, Cmt. on ANPR (Dec. 17, 2022),

https://www.regulations.gov/comment/FTC-2022-

0070-0021 (‘‘Evelhoch Cmt.’’); Anonymous, Cmt. on

ANPR (Dec. 26, 2022), https://www.regulations.gov/

comment/FTC-2022-0070-0022 (‘‘Anonymous

Consumer C Cmt.’’); Judy Draper, Cmt. on ANPR

(Dec. 28, 2022), https://www.regulations.gov/

comment/FTC-2022-0070-0023; Anonymous, Cmt.

on ANPR (Dec. 31, 2022), https://

www.regulations.gov/comment/FTC-2022-0070-

0025 (‘‘Anonymous Consumer D Cmt.’’).

8

Anonymous Consumer A Cmt. at 1.

9

Kelly Cmt. at 1; Smith Cmt. at 1; Zevely Cmt.

at 1; Evelhoch Cmt. at 1; Anonymous Consumer D

Cmt. at 1.

10

Monday Cmt. at 1.

11

Dauite Cmt. at 1; Anonymous Consumer B Cmt.

at 1.

12

Zaim Cmt. at 2; Anonymous Consumer C Cmt.

at 1.

13

Ubiquitous Advising, LLC, Cmt. on ANPR (Dec.

29, 2022), https://www.regulations.gov/comment/

FTC-2022-0070-0024 (‘‘Ubiquitous Advising Cmt.’’);

Patrick’s Pet Care, Cmt. on ANPR (Jan. 9, 2023),

https://www.regulations.gov/comment/FTC-2022-

0070-0032 (‘‘Patrick’s Pet Care Cmt.’’); Anonymous,

Cmt. on ANPR (Nov. 28, 2022), https://

www.regulations.gov/comment/FTC-2022-0070-

0009 (‘‘Anonymous Business Cmt.’’); Tammy

Provencal, Cmt. on ANPR (Jan. 9, 2023), https://

www.regulations.gov/comment/FTC-2022-0070-

0042 (‘‘Provencal Cmt.’’).

14

Ubiquitous Advising Cmt. at 1–2.

family members, which fail to provide

clear and conspicuous disclosures of

those relationships, or (ii) soliciting

reviews from employees or relatives

without instructing them to disclose

their relationships; (e) the creation or

operation of websites, organizations, or

entities that purportedly provide

independent reviews or opinions of

products or services but are, in fact,

created and controlled by the companies

offering the products or services; (f)

misrepresenting that the consumer

reviews displayed represent most or all

of the reviews submitted when, in fact,

reviews are being suppressed based

upon their negativity; (g) the

suppression of customer reviews by

physical threat or unjustified legal

threat; and (h) selling, distributing, or

buying followers, subscribers, views,

and other indicators of social media

influence. The ANPR also asked a series

of questions to inform the Commission’s

determination about whether it has

reason to believe that such practices are

prevalent and, if so, whether and how

to proceed with an NPRM.

4

During the

60-day comment period, the

Commission received 42 responsive

comments.

Based on the substance of these

comments, as well as the Commission’s

history of enforcement and other

information discussed below, the

Commission is now exercising its

authority under Section 18(a)(1)(B) of

the FTC Act to propose a trade

regulation rule that defines conduct

that, in the context of consumer reviews

or testimonials, constitutes unfair or

deceptive acts or practices. The

Commission has reason to believe that

certain unfair or deceptive practices

involving consumer reviews or

testimonials are prevalent

5

and that

proceeding with this rulemaking is in

the public interest.

After reviewing the comments and

because the Commission believes it

would be in the public interest to move

forward expeditiously with this

rulemaking proceeding, the Commission

has decided to issue this NPRM without

holding the public workshops originally

contemplated in the ANPR. Upon

reviewing the ANPR comments, the

Commission determined that

conducting public workshops at that

stage of the proceeding would not

provide additional unique viewpoints or

issues. Instead, by issuing this NPRM

and analyzing the comments submitted

in response, the Commission will be

able to further develop the record,

receive comments on potential

alternatives, and decide whether

additional events or methods are needed

to facilitate public participation in the

rulemaking process.

Below, after discussing the comments,

setting out the evidence of prevalence,

and explaining its considerations in

developing the proposed Rule, the

Commission poses specific questions for

comment and provides the text of the

proposed Rule.

II. Summary of Comments to ANPR

The Commission received 42

responsive comments in response to the

ANPR.

6

Twenty-nine comments

supported the Commission proceeding

with a rulemaking. Four comments

expressed the view that a rulemaking

was unnecessary, premature, or should

not apply to the commenter’s

constituents. One commenter expressed

skepticism about the utility of a

rulemaking. The remaining commenters

did not express a clear view on the

merits of proceeding or did not address

the question. Fifteen comments came

from individual consumers. Seven

comments were submitted by trade

associations, five by review platform

operators and one by an employee of

one such operator, three by small

businesses and one by a small business

employee, three by consumer advocacy

organizations, three by entities

dedicated to fighting fake reviews, one

by a public interest research center, one

by a think tank, one by academic

researchers, and one by an insurance

marketing organization.

The 15 individual consumers

expressed significant concerns about

fake consumer reviews and

testimonials.

7

One consumer comment

declared: ‘‘this rule to extend the FTC

power over fraudulent and paid for

testimonies and reviews is a necessity.

I think . . . protection against these

types of scams is an integral need to the

people of the United States.’’

8

Consumer commenters wrote about the

difficulty that many consumers have in

identifying fake reviews.

9

One

consumer who selected an auto repair

shop based upon misleading reviews

written by the shop’s employees or their

spouses spoke of having been personally

harmed by deceptive reviews.

10

Two

consumer comments said that truthful

negative reviews are valuable and

should not be suppressed.

11

Two

additional consumer commenters spoke

of the need to punish and deter bad

actors.

12

The four comments from small

businesses or a small business employee

were from Ubiquitous Advising, LLC,

(‘‘Ubiquitous Advising’’), Patrick’s Pet

Care, an anonymous small business that

sells products through a particular

online marketplace, and Tammy

Provencal, who is a small business

employee.

13

Ubiquitous Advising

supports the rulemaking, and

commented that fake reviews cause

more damage than anyone can

imagine.

14

It also said that review

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Id. at 1.

16

Id.

17

Patrick’s Pet Care Cmt. at 1–2.

18

Id. at 2.

19

Anonymous Business Cmt. at 1–2.

20

Provencal Cmt. at 1.

21

Yelp, Inc., Cmt. on ANPR (Jan. 6, 2023), https://

www.regulations.gov/comment/FTC-2022-0070-

0028 (‘‘Yelp Cmt.’’); Trustpilot A/S, Cmt. on ANPR

(Jan. 9, 2023), https://www.regulations.gov/

comment/FTC-2022-0070-0031 (‘‘Trustpilot Cmt.’’);

Google LLC, Cmt. on ANPR, (Jan. 9, 2023), https://

www.regulations.gov/comment/FTC-2022-0070-

0034 (‘‘Google Cmt.’’); Tripadvisor LLC, Cmt. on

ANPR (Jan. 9, 2023), https://www.regulations.gov/

comment/FTC-2022-0070-0036 (‘‘Tripadvisor

Cmt.’’); Amazon.com, Inc., Cmt. on ANPR (Jan. 9,

2023), https://www.regulations.gov/comment/FTC-

2022-0070-0041 (‘‘Amazon Cmt.’’).

22

Yelp Cmt. at 12. At the same time, Yelp said

that because ‘‘such deceptive review practices are

already illegal under Section 5 of the FTC Act,’’ it

‘‘recommends against additional rulemaking that is

specifically directed toward liability for deceptive

reviews.’’ The Commission has difficulty

reconciling these two comments as the Commission

could not adopt new civil penalties without

rulemaking.

23

Id. at 4.

24

Id.

25

Id. at 6.

26

Id. at 8.

27

Id.

28

Id. at 11–12.

29

Trustpilot Cmt. at 2. Trustpilot noted that it

defines ‘‘fake reviews’’ more broadly than was used

in the FTC’s ANPR.

30

Id. at 3.

31

Id. at 3–4.

32

Id. at 7.

33

Id.

34

Id. at 8.

35

Id. at 9.

36

Id. at 16.

37

Id. at 17.

38

Google Cmt. at 9.

39

Id. at 1, 2, 9.

40

Id. at 1.

41

Id. at 3.

42

Id.

43

Id.

44

Id. at 3, 6.

45

Id. at 8.

46

Id.

suppression is just as bad, with

businesses threatening, bullying, or

suing consumers who are trying to warn

other consumers, even when there is

zero chance of those businesses winning

such a lawsuit.

15

Ubiquitous Advising

described a company in its local area

that is constantly threatening and

bullying reviewers.

16

Patrick’s Pet Care

did not indicate clearly whether it

supports the rulemaking but

complained about being attacked with

negative reviews.

17

It suggested that

people should not be able to post

anonymous, non-traceable reviews and

that platforms should disclose the

names of reviewers.

18

The anonymous

small business that submitted a

comment did not address the proposed

rulemaking and asserted that a

particular online marketplace was

manipulating the placement of negative

reviews.

19

The small business employee

supports the rulemaking and stated that

a competitor is giving incentives for 5-

star reviews.

20

The five review platforms that

submitted comments, Yelp, Inc.

(‘‘Yelp’’), Trustpilot A/S (‘‘Trustpilot’’),

Google LLC (‘‘Google’’), Tripadvisor LLC

(‘‘Tripadvisor’’), and Amazon.com, Inc.

(‘‘Amazon’’), wrote of the importance of

reviews to consumers and the lengths to

which they go to stop and combat fake

reviews.

21

These comments conveyed

information both about the prevalence

and harm caused by fake review

practices.

Yelp, which supports civil penalties

for ‘‘businesses and individuals who

author, arrange for or pay for deceptive

reviews,’’

22

said that an overwhelming

majority of consumers who read reviews

(83 percent) say they trust online

reviews about local businesses.

23

In one

Yelp survey, 71 percent of respondents

said they would no longer visit a

business if they learned the business has

fake or compensated online reviews.

24

As a first line of defense, Yelp uses

automated software systems in order to

detect biased reviews and ‘‘flags a

significant percentage of reviews—about

19% based on Yelp’s most recent . . .

figures—as ‘not recommended.’ ’’

25

Yelp said that groups to facilitate the

buying, selling, or exchange of fake

reviews exist on various online

platforms (e.g., Facebook, Instagram,

Twitter).

26

In 2021, Yelp made more

than 1,000 reports to online platforms

warning them of nearly 950 suspicious

groups, posts, or individuals found on

their sites.

27

Yelp also wrote that

‘‘abusive and questionable or unjustified

legal threats are another form of review

suppression that Yelp constantly

confronts’’ and that its 2021 data shows

a majority of such threat alerts

‘‘stemmed from beauty and health

categories—businesses consumers often

turn to when making critical life

decisions or that can otherwise be

sensitive in nature.’’

28

Trustpilot, a Danish company

operating a website that hosts reviews of

businesses worldwide, did not appear to

support or oppose the rulemaking. It

said that of the 46.7 million Trustpilot

reviews written globally in 2021, it

removed 2.7 million fake reviews.

29

In

2021, Trustpilot identified and took

action against more than 60,000 reviews

about United States businesses that

were submitted by accounts it deemed

to be companies or individuals who

offered fake reviews for sale online.

30

It

noted that it is appropriate for

consumers to review a service provider

with which they have had an experience

even if they did not make a purchase.

31

In 2021, Trustpilot detected and

removed as biased just over 8,000

reviews for United States businesses

written by owners, officers, or

employees of the company reviewed, or

their family members.

32

Trustpilot

stated that such behavior does not

necessarily reflect intentional fraud.

33

It

commented that it is aware of cases

outside of Trustpilot in which the

suppression of negative reviews has

occurred on retailer or business

websites.

34

It has seen some cases,

mostly outside of the US, in which

businesses have threatened reviewers if

they do not delete a negative review.

35

In response to the ANPR, Trustpilot said

it is possible that, before moving to

regulation, there may be benefits in

seeking to maximize the effects of other

steps, such as educating businesses and

consumers or developing codes of

conduct.

36

It noted that while regulation

could send a strong signal, it may face

the challenge of being quite static in a

dynamic and fast-paced environment.

37

Google supports the rulemaking.

38

It

said that fake reviews undermine users’

confidence in the information available

on its platform.

39

Google uses both

automated systems and human

operators to monitor compliance with

its policies and identify and remove

fake reviews.

40

Spammers constantly

evolve their tactics, so distinguishing

between fake and authentic reviews is

an ongoing battle.

41

For example, in

response to advances in Google’s

detection and mitigation capabilities,

bad actors have adapted, such as by

using Virtual Private Networks

(‘‘VPNs’’) to evade routine detection.

42

Google said that businesses may also

have strong incentives to buy positive

reviews, which exacerbates the

problem.

43

In addition, many reviews

displayed on its platform are sourced or

surfaced from third parties (e.g., from

the merchant website where consumers

purchased the product or service), and

it can be more difficult to detect when

such reviews are fake because Google

lacks access to some signals of

inauthentic activity, such as the account

that created the review being used to

post duplicate content.

44

In 2022,

Google removed millions of reviews

from Google Play that it determined to

be fake, inorganic, or otherwise

malicious.

45

In 2021, users submitted

around one billion Google Maps reviews

and Google blocked or removed more

than 95 million of them for violating its

policies.

46

Google also removed another

one million reviews that were reported

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Id.

48

Id. at 9.

49

Tripadvisor Cmt. at 7.

50

Id.

51

Id. at 5–6.

52

Id. at 11.

53

Id. at 10.

54

Amazon Cmt. at 2.

55

Id.

56

Id. at 2.

57

Id.

58

Id. at 3.

59

Id.

60

Miao Zhao, Cmt. on ANPR (Dec. 19, 2022),

https://www.regulations.gov/comment/FTC-2022-

0070-0020 (‘‘Zhao Cmt.’’) at 1.

61

Id.

62

Id. at 1–2.

63

Rajvardhan Oak and Zubair Shafiq, Cmt. on

ANPR (Jan. 9, 2023), https://www.regulations.gov/

comment/FTC-2022-0070-0030 (‘‘Oak & Shafiq

Cmt.’’) at 1.

64

Id. at 3–4.

65

Id. at 4.

66

Id. at 7–8.

67

Id. at 8.

68

Id.

69

The Transparency Company, Cmt. on ANPR

(Jan. 9, 2023), https://www.regulations.gov/

comment/FTC-2022-0070-0044 (‘‘Transparency

Company Cmt.’’); Fake Review Watch, Cmt. on

ANPR (Jan. 5, 2023), https://www.regulations.gov/

comment/FTC-2022-0070-0026 (‘‘Fake Review

Watch Cmt.’’); Fakespot, Inc., Cmt. on ANPR (Jan.

9, 2023), https://www.regulations.gov/comment/

FTC-2022-0070-0035 (‘‘Fakespot Cmt.’’).

70

Transparency Company Cmt. at 9, 18; Fake

Review Watch Cmt. at 2; Fakespot Cmt. at 1–2.

71

Transparency Company Cmt. at 9.

72

Id.; Uberall, The State of Online Review Fraud:

An Analysis of 4 Million Reviews on Google,

Facebook, Yelp and Tripadvisor at 15, https://

join.momentfeed.com/hubfs/

2021%20Fake%20Reviews/FakeReviews_

Report.pdf.

73

Transparency Company Cmt. at 16, 18.

74

Transparency Company Cmt. at 16.

75

Id. at 18–20.

76

Fake Review Watch Cmt. at 1, 9.

directly to it, and it disabled more than

one million user accounts due to policy-

violating activity.

47

Google urged the

Commission to focus on those posting

fake reviews rather than on the

platforms.

48

Tripadvisor agrees that deceptive

actions by bad actors harm consumers

and honest businesses.

49

In 2021, of the

26 million reviews submitted to

Tripadvisor, it identified 3.6 percent as

violating its fraud guidelines.

50

It said

that in certain scenarios it can be

difficult to distinguish authentic

reviews from fake.

51

Tripadvisor also

said that efforts to suppress negative

reviews, including by threatening

reviewers, is one of the problems that

plague the online consumer review

ecosystem.

52

Finally, it believes that

targeted authority for the FTC to impose

financial penalties on bad actors can be

an element of a comprehensive effort to

improve the consumer information

ecosystem, but that any provision that

authorizes the assessment of a financial

penalty must be appropriately targeted

in both design and enforcement at those

who knowingly engage in clearly

deceptive and fraudulent practices.

53

Amazon did not state support for or

opposition to the rulemaking. Amazon

said that in 2021 alone, it invested more

than $900 million and employed more

than 12,000 people who were dedicated

to protecting customers and its store

from fraud and other forms of abuse.

54

Amazon stated that it proactively

stopped more than 200 million

suspected fake reviews in 2020 alone.

55

Amazon also noted that fraudsters

approach its customers through their

own websites and on social media and

solicit them to write misleading reviews

in exchange for money, free products, or

other incentives.

56

In 2021, Amazon

reported more than 16,000 social media

groups that were buying or exchanging

misleading reviews to the social media

sites that hosted them, including

Facebook, Twitter, and Instagram,

resulting in the removal of groups with

more than 11 million members.

57

In July

2022, Amazon sued more than 10,000

such Facebook groups.

58

Amazon

encouraged the FTC to increase the use

of its existing authority to pursue fake

review brokers, collaborate with other

regulators to combat bad actors who

facilitate review abuse, continue to

provide guidance to legitimate

businesses, and educate consumers

about how to identify and report fake

reviews.

59

An individual Amazon employee

working in the Amazon Risk department

for the past 10 years submitted a

comment.

60

The commenter personally

reviewed thousands of seller and buyer

accounts for review abuse and said there

is no dispute that deceptive reviews are

widespread and harmful to customers.

61

The commenter is ‘‘skeptical about

whether the regulation will be effective’’

because most online platforms and

shopping websites do not require

customers to register using real

identities in order to leave reviews and

because Section 230 of the

Communications Decency Act (47

U.S.C. 230) immunizes internet service

providers, like Google and Facebook,

from lawsuits ‘‘based on claims related

to content published by third-parties

using their service[s].’’

62

The academic researchers who

submitted a comment were Rajvardhan

Oak and Zubair Shafiq from the

University of California Davis, who had

examined reviews on online

marketplaces.

63

They infiltrated an

‘‘incentivized review service geared

towards Amazon.com’’ and discovered

solicitations for incentivized five-star

reviews for 242,000 products.

64

They

found more than 250 groups on

Facebook in which reviews were

brokered, the largest of which had

around 550,000 members.

65

Over the six

weeks that they tracked products for

which incentivized reviews were

sought, no reviews were removed from

nearly 50 percent of those products.

66

Although Amazon delists products

suspected of seeking incentivized

reviews, only 25 of the 1,600 products

they were tracking were removed by

Amazon during the six-week period.

67

They also said that, in response to

Amazon’s lawsuits against Facebook

groups, group administrators and agents

simply created alternate communication

channels, such as Signal/Telegram

groups, and circulated the details of the

alternatives.

68

The Commission received comments

from three entities dedicated to fighting

fake reviews: the Transparency

Company, Fake Review Watch, and

Fakespot, Inc.

69

All three commenters

asserted that the strategies that are

currently being used by review

platforms are insufficient.

70

The Transparency Company, which

supports a rulemaking, said that its

research suggests that the major review

websites are unable to detect a majority

of fake reviews online.

71

It estimated

that 8.5 percent of published reviews—

for all industries—are fake, and

provided a link to its fake review

research, which asserted that 10.7

percent of Google reviews, 7.1 percent

of Yelp reviews, and 5.2 percent of

Tripadvisor reviews were fake.

72

The

comment noted that 54 percent of

consumers say that they would not buy

a product if they suspected it to have

fake reviews and estimated that

consumer injury from fake reviews is

approximately $5 billion per year.

73

It

documented over 1,000 examples of

fake negative reviews causing injury to

competition and it estimates that

thousands of lawyers are hired each

year to send demand letters to and

intimidate the authors of negative

consumer reviews.

74

The comment

identified platform actions that have

been effective in reducing consumer

harm associated with fake reviews but

said that ending online review fraud

would require, among other things, the

authentication of consumer reviewers.

75

Fake Review Watch, which supports a

rulemaking, said that there is a robust

black market for paid for (or traded for)

reviews on Google, Yelp, Facebook,

Trustpilot, and numerous other review

sites and that many of the transactions

are conducted on social media.

76

It

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77

Id. at 1.

78

Id.

79

Id. at 3.

80

According to Yelp, Yelp Elite members are

chosen ‘‘based on a number of things, including

well-written reviews, high quality photos, a

detailed personal profile, and a history of playing

well with others.’’ https://www.yelp-support.com/

article/What-is-Yelps-Elite-Squad?l=en_US.

81

Id. at 4–5.

82

Id. at 9.

83

Fakespot Cmt. at 1.

84

Truth in Advertising, Inc., Cmt. on ANPR (Jan.

9, 2023), https://www.regulations.gov/comment/

FTC-2022-0070-0029 (‘‘TINA Cmt.’’) at 1; U.S.

Public Interest Research Group, Cmt. on ANPR (Jan.

9, 2023), https://www.regulations.gov/comment/

FTC-2022-0070-0045 (‘‘US PIRG Cmt.’’) at 2;

National Consumers League, Cmt. on ANPR (Jan. 9,

2023), https://www.regulations.gov/comment/FTC-

2022-0070-0039 (‘‘NCL Cmt.’’) at 1. Electronic

Privacy Information Center (‘‘EPIC’’), which is a

public interest research center, submitted a

comment supporting a rulemaking. Its comment

focused mainly on endorsements by police

organizations of one product. Electronic Privacy

Information Center, Cmt. on ANPR (Jan. 9, 2023),

https://www.regulations.gov/comment/FTC-2022-

0070-0043.

85

TINA Cmt. at 2–3.

86

Id. at 3.

87

Id. at 3.

88

US PIRG Cmt. at 1.

89

Id.

90

Id. at 1–2.

91

NCL Cmt. at 1.

92

Id. at 2.

93

Id.

94

Id. at 3–4.

95

Id. at 4.

96

Id.

97

North American Insulation Manufacturers

Association, Cmt. on ANPR (Jan. 9, 2023), https://

www.regulations.gov/comment/FTC-2022-0070-

0037 (‘‘NAIMA Cmt.’’); American Dental

Association, Cmt. on ANPR (Jan. 5, 2023), https://

www.regulations.gov/comment/FTC-2022-0070-

0027 (‘‘ADA Cmt.’’); Computer & Communications

Industry Association, Cmt. on ANPR (Jan. 9, 2023),

https://www.regulations.gov/comment/FTC-2022-

0070-0047 (‘‘CCIA Cmt.’’); Travel Technology

Association, Cmt. on ANPR (Jan. 9, 2023), https://

www.regulations.gov/comment/FTC-2022-0070-

0046 (‘‘Travel Tech Cmt.’’); National Automobile

Dealers Association, Cmt. on ANPR (Jan. 9, 2023),

https://www.regulations.gov/comment/FTC-2022-

0070-0038 (‘‘NADA Cmt.’’); National Retail

Federation, Cmt. on ANPR (Jan. 9, 2023), https://

www.regulations.gov/comment/FTC-2022-0070-

0039 (‘‘NRF Cmt.’’); Association of National

Advertisers, Cmt. on ANPR (Jan. 9, 2023), https://

www.regulations.gov/comment/FTC-2022-0070-

0040 (‘‘ANA Cmt.’’).

98

NAIMA Cmt. at 1; ADA Cmt. at 1.

99

NAIMA Cmt. at 2.

100

Id.

stated that fake reviews are

commonplace and often difficult to

detect without examining review profile

histories across multiple businesses.

77

Fake Review Watch has observed over

100 Facebook groups operating as

review exchanges, with hundreds or

thousands of members each.

78

The

comment also asserted that Google: (a)

often allows profiles that posted fake

reviews to remain active even after it

removes those reviews, (b) provides no

alerts to consumers about businesses

with fake reviews, and (c) makes fake

review detection more difficult by

allowing profiles to choose not to

display all of their reviews and by not

displaying the dates of reviews.

79

The

comment also complained about

reviews by Yelp Elite members,

80

which

Fake Review Watch asserted are

automatically recommended and not

subject to evaluation by Yelp’s

recommendation software, and about

the inadequacy of Yelp’s consumer

alerts.

81

Fake Review Watch said that

regulators should require review sites to

tell consumers everything they know

about a business’s reviews and to post

notices reminding consumers that the

site cannot guarantee the truthfulness

and accuracy of any review.

82

Fakespot did not state support for or

opposition to a rulemaking. In its

comment, Fakespot opined that sellers

posting fake reviews and fake review

farms are among the malicious actors

generating fake online content that, in

the last five years, has led to a ‘‘dramatic

deterioration’’ of trust between sellers,

platforms, and consumers.

83

The three consumer advocacy

organizations that submitted comments,

Truth in Advertising, Inc. (‘‘TINA’’), the

U.S. Public Interest Research Group

(‘‘US PIRG’’), and the National

Consumers League (‘‘NCL’’), all

advocated for a rulemaking.

84

TINA said that fake reviews are an

insidious problem, primarily because

consumers have come to rely heavily on

reviews in making their online

purchasing decisions, and it provided

numerous citations to publications

regarding the importance of reviews to

consumer decision making.

85

It stated

that incentives to generate early,

positive reviews have led to a

proliferation of false and fake reviews—

a deceptive marketing tactic that will

only continue to flourish if not

effectively reined in by regulators.

86

TINA said that, given the Supreme

Court’s AMG Capital Management

decision, a rule would substantially

improve the agency’s ability to combat

and deter deception and unfairness in

this area.

87

US PIRG cited findings by industry

observers that 30 to 40 percent of online

reviews are not genuine, and stated that

consumers have no way of knowing

which reviews are legitimate.

88

It

asserted that fake reviews harm both

consumers who are trying to make

informed buying decisions and honest

businesses, and that, when consumers

lose confidence in reviews, legitimate

positive reviews do not mean as

much.

89

It said that the marketplace is

poisoned by outright fake reviews,

reviews written in exchange for free

items, fake negative reviews written

about competitors, review suppression,

reviews or endorsements written for

consideration, and misrepresentations

that a website or a certification or a seal

is independent.

90

NCL said that millions of consumers

use reviews every day to inform billions

of dollars in purchasing decisions

involving both online and offline

businesses.

91

It cited an estimate that in

2021, fraudulent reviews cost U.S.

consumers $28 billion.

92

NCL also cited

a different study which said that, by

deceiving buyers into purchasing lower

quality and potentially unsafe products,

fake reviews lead to $0.12 of consumer

welfare lost for every $1 spent online.

93

It said that the practices outlined in the

ANPR were all unfair and deceptive,

that the sellers and service providers

that do not use fake reviews are at a

competitive disadvantage, that the

effects of a fake review may last up to

a month after its deletion or detection,

and that the threat of fake negative

reviews is being used to extort honest

businesses.

94

NCL also asked the

Commission to require platforms to

implement measures to combat the

unfair and deceptive uses of reviews,

endorsements, and indicators of social

media influence, possibly requiring

purchase verification before allowing a

user to leave a review and the active

policing of reviews.

95

Finally, NCL

suggested that the FTC explore options

for holding platforms accountable for

allowing organized review fraud to

flourish.

96

The seven trade associations that

submitted comments, the North

American Insulation Manufacturers

Association (‘‘NAIMA’’), the American

Dental Association (‘‘ADA’’), the

Computer & Communications Industry

Association (‘‘CCIA’’), the Travel

Technology Association (‘‘Travel

Tech’’), the National Automobile

Dealers Association (‘‘NADA’’), the

National Retail Federation (‘‘NRF’’), and

the Association of National Advertisers

(‘‘ANA’’),

97

took widely divergent

positions on a rulemaking.

NAIMA and ADA both support a

rulemaking.

98

With respect to reviews or

other endorsements by nonexistent

individuals, NAIMA said that it has

challenged misleading claims that were

‘‘supported by avatars or entities that

there was no chance of making real

contact with.’’

99

It also asserted that

testimonials by those misrepresenting

their experiences with products are

plentiful.

100

Finally, NAIMA stated that

it regularly challenges statements about

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Id.

102

ADA Cmt. at 1.

103

Travel Tech Cmt. at 1.

104

Id. at 3.

105

Id. at 4.

106

CCIA Cmt. at 4.

107

NADA Cmt. at 1–2.

108

Id. at 3.

109

Id.

110

Id.

111

Id. at 3–4.

112

Id. at 4 n.12.

113

Id. at 5.

114

NRF Cmt. at 1.

115

Id. at 2.

116

Id. at 2–3.

117

Id. at 6.

118

Id.

119

Id.

120

Id. at 7.

121

ANA Cmt. at 2, 4.

122

Id. at 1–2.

123

Id. at 6.

124

Id. at 7.

its members’ products ‘‘that appear on

standalone websites which falsely claim

to be independent reviewers.’’

101

ADA

wants the FTC to allow dentists to

disclose patient information in

responding to reviews and to require

that reviewers identify themselves.

102

It is unclear whether Travel Tech or

CCIA support a rulemaking. Travel Tech

commented that the integrity of reviews

is essential to maintain the trust and

confidence of the customers of Travel

Tech members.

103

It stated that the

overwhelming majority of reviews are

legitimate and that Travel Tech

members have systems in place to

address the minority of reviews that can

be harmful to consumers or travel-

related operators and providers.

104

Travel Tech recommended that the

Commission utilize its existing

authority to combat nefarious paid

review-generation sites, referred to as

‘‘click farms.’’

105

CCIA said that any

proposed rulemaking should focus on

bad actors engaging in fraudulent

behavior, not legitimate endorsements

that happen to occur through social

media.

106

NADA commented that rulemaking is

unnecessary because the Commission

did not identify any harmful market

conduct for which remedies to protect

consumers do not exist under current

Federal and state law and because

monetary penalty authority alone is not

reason enough to issue a rule.

107

Its

comment continued that, if the

rulemaking proceeds, the Commission

should stick to its stated goal of

addressing ‘‘certain types of clear

Section 5 violations involving reviews

and endorsements’’ to ‘‘benefit

consumers, help level the playing field,

and not burden legitimate

marketers.’’

108

With respect to any

potential rule provision addressing

businesses writing, soliciting, or

publishing reviews by their employees

or family members, NADA asked that

the FTC make clear that a violation

‘‘only arises when the business, and not

another entity, affirmatively writes,

solicits, and publishes reviews that fail

to provide clear and conspicuous

disclosures of those relationships’’ and

that the FTC define the term

‘‘relative.’’

109

The comment asserted

that businesses may legitimately ‘‘seek

to remove reviews or comments that are

off topic or include false statements,

advertisements, inappropriate language,

or confidential or personal

identification information’’ or to

‘‘remove comments or review functions

on their own websites or certain social

media posts.’’

110

NADA also posited

other practices that they considered

legitimate and did not want prohibited

under a possible rule: (a) responding on

a comment thread to each negative

review, offering an explanation, making

customers whole, and asking any

successfully satisfied customers to

respond on the thread with their

satisfaction or update their previously

negative review; (b) surveying customer

satisfaction and prompting only

satisfied customers to leave reviews; (c)

reaching out to consumers in an effort

to change reviews by addressing their

issues, sometimes giving customers

something of value in satisfaction of

their problems; or (d) highlighting five-

star reviews from satisfied customers on

a dealer’s websites.

111

NADA said it

understood that some third-party review

websites promoted their services to

businesses and if a business did not

purchase those services, it would have

a negative effect on the consumer

reviews shown for the business.

112

Finally, NADA said that the FTC should

directly engage with review websites, e-

commerce sites, and consumer brands

through public workshop

conferences.

113

NRF opposed additional regulation of

retailers but not of fake review

brokers.

114

It believes that the issue of

fake and misleading reviews is

important but that fake review brokers

are much more likely to mislead

consumers and create issues for retailers

given the potential for brokers to submit

fake reviews in volume.

115

NRF said

that the fraudulent tactics employed by

review brokers can include: (a) using

‘‘bots’’ and artificial intelligence tools to

generate reviews on behalf of

nonexistent consumers; (b) posting

identical, or substantially identical,

reviews for multiple different products

and/or under multiple consumer

accounts; (c) flooding social media

platforms such as Twitter, Instagram,

and Facebook with false review content,

whether as standalone posts or as

comments or replies to genuine reviews

or consumer questions; (d) creating and

operating social media groups or

standalone websites that purport to offer

benefits like refunds or coupons in

exchange for specified types of reviews

or ratings; and (e) reimbursing

consumers for what would otherwise

appear to be bona-fide purchases in

exchange for positive 5-star reviews and

ratings.

116

NRF opposed requiring

retailers to restrict consumer reviews to

verified purchasers.

117

It also opposed

blanket approaches such as ‘‘requiring

manual review of every consumer

review and the poster’s profile’’ or

approaches that ‘‘risk inadvertent

discriminatory or disparate deletion of

reviews based on implicit biases

towards certain consumer classes.’’

118

NRF said that if a retailer is actually

acting in bad faith (whether by itself or

by intentionally engaging a fake review

broker to act on its behalf), the FTC can

take the step of ‘‘filing a complaint and

bringing formal enforcement action

seeking monetary damages as it has

done several times this year alone.’’

119

It accordingly believes that no new

enforcement mechanism is necessary for

the Commission to ensure retailers

comply with existing law, or to hold

them accountable for violations.

120

ANA asserted that a rulemaking is

premature, while making clear that

‘‘ANA does not take the position that

fake reviews may not produce economic

injury.’’

121

It asserted that the ‘‘FTC has

not demonstrated evidence of

prevalence and has not identified a

particular industry that would justify

embarking upon rulemaking that would

be sufficient, clear, narrowly tailored,

easy to enforce, and not burdensome to

legitimate marketers.’’

122

ANA

appeared to agree that some of the

practices challenged in past FTC cases

involving the offering of compensation

or other incentives in exchange for, or

conditioned on, the writing of positive

consumer reviews are problematic and

deceptive.

123

It sought to distinguish

such practices from other practices that,

according to ANA, do not obviously

cause consumer harm, such as review

gating or the ‘‘mere solicitation of

positive reviews.’’

124

The Commission also received a

comment from an insurance marketing

organization, Family First Life LLC

(‘‘Family First Life’’), which supported

‘‘a narrowly tailored rule [that] would

benefit consumers, help level the

playing field, and not burden legitimate

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Family First Life LLC, Cmt. on ANPR (Jan. 9,

2023), https://www.regulations.gov/comment/FTC-

2022-0070-0049 (‘‘Family First Life Cmt.’’) at 1–2.

126

Id. at 9.

127

Id. at 9–10.

128

Id. at 12–13.

129

Id. at 14.

130

Id. at 18.

131

Center for Data Innovation, Cmt. on ANPR

(Jan. 9, 2023), https://www.regulations.gov/

comment/FTC-2022-0070-0048 (‘‘CDI Cmt.’’).

132

Id. at 5.

133

Id. at 3.

134

Id. at 3–4.

135

Id. at 5.

136

Id.

137

Id. at 5–6.

138

Amazon Cmt. at 2.

139

Google Cmt. at 8.

140

Yelp Cmt. at 6.

141

Tripadvisor Cmt. at 7.

142

Trustpilot Cmt. at 3.

143

Amazon Cmt. at 2.

144

Id. at 3.

145

Yelp Cmt. at 8.

146

Fake Review Watch Cmt. at 1.

147

Zhao Cmt. at 1.

148

Transparency Company Cmt. at 9.

149

Fake Review Watch Cmt. at 4.

150

US PIRG Cmt. at 1.

151

Oak & Shafiq Cmt. at 7–8.

152

CDI Cmt. at 3.

marketers.’’

125

It recommended that any

regulation ‘‘be tailored to exclude

situations where an employee or

independent contractor is leaving a

review of their experience working with

their employer or principal.’’

126

Family

First Life pointed out that when

someone ‘‘writes a review of her own

personal experience working with a

company on workplace-review

platforms, such as Glassdoor or Indeed,’’

concerns about the reviewer’s

undisclosed relationship to the

company are absent because, on such

platforms, ‘‘there is an obvious and

assumed relationship between the

reviewer and the company.’’

127

Family

First Life commented that the ‘‘FTC

should not write a rule that sweeps in

and penalizes any review just because

the reviewer was offered an incentive to

write it—without otherwise dictating

what the review says.’’

128

Family First

Life also stated that the ‘‘FTC should

include in any proposed regulation it

promulgates a safe harbor for truthful

reviews that are incentivized but not

influenced, controlled, or conditioned

by the entity offering the incentive.’’

129

Finally, it asserted that the FTC should

not treat platforms’ determinations of

policy violations as evidence of rule

breaking.

130

The Commission also received a

comment from a non-partisan think

tank, the Center for Data Innovation

(‘‘CDI’’).

131

As part of its comment, CDI

asserted that regulation is premature

because there are no widely accepted

best practices for platforms and

platforms are still experimenting with

solutions.

132

CDI acknowledged that

researchers studying deceptive reviews

found that fake reviews do have a large

presence online and a significant impact

on commerce, citing research and

reports that included the following

findings, among others: (a) ‘‘around five

percent of reviews left for a private-label

apparel company were posted by

individuals who did not purchase

products’’; (b) ‘‘around 4 percent of

online reviews [we]re fake in 2021’’; (c)

fake reviews impact nearly $152 billion

in global e-commerce revenue; (d) Yelp

flagged and filtered out around 16

percent of reviews in 2016; and (e) 20

percent of 41,572 reviews on

Tripadvisor were suspicious.

133

It noted

that an artificial intelligence (‘‘AI’’)

system is able to write reviews that are

nearly indistinguishable from reviews

written by people.

134

CDI commented

that fake review brokers help facilitate

the creation of fake reviews by

connecting bad actors with reviewers,

often using ‘‘large groups on websites

such as Facebook to find reviewers

willing to write reviews in exchange for

free products or compensation.’’

135

The

comment asserted that the review broker

dictates the rating and what the review

should say and then pays the reviewer

only once the review is accepted and

posted.

136

CDI proposed that, instead of

engaging in a rulemaking, the FTC

should establish partnerships with

review companies, e-commerce

platforms, and social media companies

to establish voluntary best practices to

detect and prevent fake reviews.

137

III. Prevalence of the Consumer Review

and Testimonial Practices at Issue

A. Fake or False Consumer Reviews or

Testimonials

Comments from the platforms support

a finding that fake consumer reviews are

prevalent. In 2020, Amazon asserted it

proactively stopped more than 200

million suspected fake reviews.

138

In

2021, according to the company, Google

blocked or removed more than 95

million Google Maps reviews for policy

violations; in 2022, it removed millions

of fake, inorganic, or otherwise

malicious Google Play reviews.

139

Yelp

commented that, in 2021, its

recommendation software identified

about 19 percent of reviews as ‘‘not

recommended.’’

140

In 2021, Tripadvisor

reportedly flagged 3.6 percent of

reviews submitted (or about one million

reviews) as fraudulent.

141

Trustpilot

stated that in 2021, accounts deemed to

be review sellers submitted more than

60,000 reviews of U.S. businesses; it

identified and filtered the reviews and

blocked the accounts associated with

them.

142

Several comments spoke about the

prevalence of consumer review rings on

various online platforms (e.g., Facebook,

Instagram, Twitter) that facilitate the

buying, selling, or exchange of fake

reviews. In 2021, Amazon reported

more than 16,000 abusive review-related

groups to social media sites, leading to

the removal of groups with more than

11 million members.

143

In July 2022,

Amazon sued administrators of more

than 10,000 Facebook groups that

attempted to orchestrate fake reviews on

Amazon.com in exchange for money or

free products.

144

In 2021, Yelp reported

almost 950 suspicious groups, posts, or

individuals to online platforms.

145

Fake

Review Watch has accessed more than

100 Facebook review exchange groups,

each with hundreds or thousands of

participants.

146

The comment from the Amazon

employee who reviewed thousands of

accounts for review abuse said that

deceptive reviews are widespread.

147

Other comments suggest the platforms

may be underestimating the extent of

the fake review problem. The

Transparency Company estimated 8.5

percent of published consumer reviews

are fake.

148

The Fake Review Watch

comment explained reviews written by

Yelp Elite members are not subject to

evaluation by Yelp’s automatic software

and there is a robust market for Yelp

Elite Reviews.

149

US PIRG asserted 30 to

40 percent of online reviews are

fabricated or otherwise not genuine.

150

The UC Davis researchers found that

nearly 50 percent of the products sold

on Amazon.com by those seeking

incentivized reviews did not have any

of their reviews removed during the six-

week period the researchers tracked

them.

151

CDI cited research regarding

the prevalence of fake reviews,

including findings that ‘‘around five

percent of reviews left for a private-label

apparel company were posted by

individuals who did not purchase

products,’’ ‘‘around 4 percent of online

reviews [we]re fake in 2021,’’ and, based

on a third-party analysis of 41,572

reviews, around 20 percent of

Tripadvisor reviews were suspicious.

152

Numerous research reports, several of

which are cited in the comments,

further establish the prevalence of fake

reviews. For example, in 2020, the

Department of Homeland Security

issued a report that focused on

counterfeit and pirated goods but also

found that ‘‘the ratings systems across

platforms have been gamed, and the

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See, e.g., Department of Homeland Security,

Combating Trafficking in Counterfeit and Pirated

Goods (2020), https://www.dhs.gov/sites/default/

files/publications/20_0124_plcy_counterfeit-

pirated-goods-report_01.pdf.

154

See ‘‘Fake Reviews: How Big a Problem

Exactly?,’’ Oct. 28, 2021, https://uberall.com/en-us/

resources/blog/how-big-a-problem-are-fake-reviews.

Notably, these percentages refer to reviews that

were not blocked by these platforms before

publication.

155

See University of Baltimore and CHEQ, ‘‘The

Economic Cost of Bad Actors on the Internet: Fake

Online Reviews 2021,’’ https://

f.hubspotusercontent00.net/hubfs/5228455/

Research/

Fake%20Online%20Reviews%202021.pdf.

156

See Fakespot, ‘‘2021 Fakespot US Online

Shopping, Ratings & Reviews Analysis Report,’’

https://www.fakespot.com/2021holidayreport.

157

See Sammy Paget, ‘‘Local Consumer Review

Survey 2023,’’ Feb. 7, 2023, https://

www.brightlocal.com/research/local-consumer-

review-survey/.

158

See, e.g., Jesper Akesson et al., ‘‘The Impact

of Fake Reviews on Demand and Welfare,’’ National

Bureau of Economic Research Conference, July 20,

2022, https://conference.nber.org/conf_papers/

f166391.pdf; Sherry He et al., ‘‘The Market for Fake

Reviews,’’ 2021, https://papers.ssrn.com/sol3/

papers.cfm?abstract_id=3664992; Devesh Raval,

‘‘Do Bad Businesses Get Good Reviews? Evidence

from Online Review Platforms,’’ 2020, https://

deveshraval.github.io/reviews.pdf; Renee DiResta,

‘‘Manipulating Consumption,’’ 2018, https://

medium.com/@noupside/manipulating-

consumption-42f2e9013d0b; Ted Lappas et al.,

‘‘The Impact of Fake Reviews on Online Visibility:

A Vulnerability Assessment of the Hotel Industry,’’

2016, https://pubsonline.informs.org/doi/abs/

10.1287/isre.2016.0674; Michael Luca and Georgios

Zervas, ‘‘Fake It Till You Make It: Reputation,

Competition, and Yelp Review Fraud,’’ 62(12)

Mgmt. Sci. Dec. 3412–27 (2016), https://

dash.harvard.edu/handle/1/22836596.

159

See, e.g., Bob Segall, ‘‘Millions of those 5-star

online reviews are fake; Here’s how to spot them,’’

WTHR, Feb. 15, 2022, https://www.wthr.com/

article/news/investigations/13-investigates/many-

of-those-5-star-reviews-you-see-online-are-totally-

fake-yelp-google-facebook-false-accounts/531-

f175843b-1316-494a-a746-5bdfcada43fa; Nicole

Nguyen, ‘‘Fake Reviews and Inflated Ratings Are

Still a Problem for Amazon,’’ Wall St. J., June 13,

2021, https://www.wsj.com/articles/fake-reviews-

and-inflated-ratings-are-still-a-problem-for-amazon-

11623587313; Laura Sydell, ‘‘Fake patient reviews

are making it increasingly hard to seek medical help

on Google, Yelp and other directory sites,’’ Wash.

Post, June 5, 2021, https://

www.washingtonpost.com/business/2021/06/04/

fake-medical-reviews-google-zocdoc-trustpilot/;

Matthew Pierce et al., ‘‘Black market in Google

reviews means you can’t believe everything you

read,’’ CBC News, May 4, 2021 (finding that sale of

reviews is a growing and widespread problem),

https://www.cbc.ca/news/investigates/fake-reviews-

on-google-1.6033859; Natasha Lomas, ‘‘Apple urged

to root out rating scams as developer highlights ugly

cost of enforcement failure,’’ Tech Crunch, Feb. 3,

2021 (finding that selling fake App Store reviews

‘‘is a booming business’’), https://techcrunch.com/

2021/02/03/apple-urged-to-root-out-rating-scams-

as-developer-highlights-ugly-cost-of-enforcement-

failure/; Katie Tarasov, ‘‘Amazon is filled with fake

reviews and it’s getting harder to spot them,’’

CNBC, Sep. 6, 2020, https://www.cnbc.com/2020/

09/06/amazon-reviews-thousands-are-fake-heres-

how-to-spot-them.html; Greg Sterling, ‘‘Fake

reviews problem is much worse than people know,’’

Search Engine Land, Apr. 22, 2020, https://

searchengineland.com/fake-reviews-problem-is-

much-worse-than-people-know-333331; Nick

Fernandez, ‘‘It’s 2020 and the Google Play Store still

has a major fake review problem,’’ Android

Authority, Feb. 23, 2020, https://

www.androidauthority.com/play-store-fake-review-

problem-1082191/; Eric Griffith, ‘‘39 Percent of

Online Reviews Are Totally Unreliable,’’ PCMag,

Nov. 7, 2019, https://www.pcmag.com/news/39-

percent-of-online-reviews-are-totally-unreliable;

Elizabeth Dwoskin and Craig Timberg, ‘‘How

merchants use Facebook to flood Amazon with fake

reviews,’’ Wash. Post, Apr. 23, 2018, https://

www.washingtonpost.com/business/economy/how-

merchants-secretly-use-facebook-to-flood-amazon-

with-fake-reviews/2018/04/23/5dad1e30-4392-11e8-

8569-26fda6b404c7_story.html.

160

See, e.g., Hannah Walsh, ‘‘Apple App store

and Google Play flooded with fake reviews,’’

WHICH?, Mar. 9, 2023, https://www.which.co.uk/

news/article/apple-app-store-and-google-play-

flooded-with-fake-reviews-aEA138U8bUw6; Sara

Spary, ‘‘How Facebook fuels Amazon’s fake

reviews,’’ WHICH?, Jan. 13, 2022 (finding Facebook

groups with more than 200,000 members facilitating

the sale of fake Amazon reviews), https://

www.which.co.uk/news/2022/01/how-facebook-

fuels-amazons-fake-reviews/; Hannah Walsh, ‘‘How

a thriving fake review industry is gaming Amazon

marketplace,’’ WHICH?, Feb. 16, 2021 (finding a

‘‘thriving industry of review manipulation

businesses’’ targeting the Amazon marketplace and

trading on a ‘‘massive scale’’), https://

www.which.co.uk/news/2021/02/how-a-thriving-

fake-review-industry-is-gaming-amazon-

marketplace/.

161

See, e.g., Chat GPT, ‘‘Reader Beware: This

Gear Review Was Written by an AI Bot,’’

GearJunkie, Dec. 7, 2022, https://gearjunkie.com/

news/chat-gpt-ai-gear-review-msr-pocket-rocket.

162

See Annie Palmer, ‘‘People are using A.I.

chatbots to write Amazon reviews,’’ CNBC, Apr. 25,

2023, https://www.cnbc.com/2023/04/25/amazon-

reviews-are-being-written-by-ai-chatbots.html.

proliferation of fake reviews and

counterfeit goods on third-party

marketplaces now threatens the trust

mechanism itself.’’

153

An Uberall report

from 2021 estimated 10.7 percent of

Google reviews, 7.1 percent of Yelp

reviews, and 5.2 percent of Tripadvisor

reviews were fake.

154

A 2021 joint

report by the University of Baltimore

and CHEQ AI Technologies Ltd., a

company that provides online security

services, described the ‘‘booming

market’’ for fake reviews and estimated,

based on self-reporting from several

major platforms, four percent of global

reviews are fake.

155

Also in 2021,

Fakespot released a report finding that,

in 2020, nearly 37.6 percent of reviews

on Walmart.com were unreliable, with

the figure at 27.6 percent for

Amazon.com.

156

Further, in its most

recent annual local consumer review

survey, BrightLocal reported 54 percent

of consumers were confident they saw

fake reviews on Amazon.com in 2022,

with the figures being 50 percent for

Google and 42 percent for Facebook.

157

Academic research—some of which,

again, is cited in the comments—has

also repeatedly confirmed the

prevalence of fake reviews.

158

Numerous journalists, including from

The Washington Post, The Wall Street

Journal, CBC News, and CNBC, have

also reported on such prevalence,

sometimes having undertaken their own

investigations.

159

Further, Which?, a

consumer advocacy group based in the

United Kingdom, has issued several

reports documenting fake and

manipulated reviews across multiple

platforms.

160

More recently, concerns have been

raised that generative artificial

intelligence (‘‘AI’’) tools can be used to

write product reviews.

161

It has been

reported that an AI chatbot is being used

to create fake reviews.

162

As the

reporting notes, the widespread

emergence of AI chatbots is likely to

make it easier for bad actors to write

fake reviews.

The Commission has brought

numerous cases involving allegedly

fabricated consumer reviews. See, e.g.,

Complaint at 9–17, FTC v. Roomster

Corp., No. 1:22–CV–07389 (S.D.N.Y.

Aug. 30, 2022) (alleged purchase and

sale of fake app store and other reviews

for room and roommate finder app and

platform); Complaint at 2–4, Sunday

Riley Modern Skincare, LLC, No. C–4729

(Nov. 6, 2020) (company personnel

allegedly created fake accounts to write

fake reviews of company’s products on

third-party retailer’s website); Shop

Tutors, Inc., 169 F.T.C. 476, 487–89

(2020) (reviews of LendEDU were

allegedly fabricated by its employees,

other associates, or their friends and

published on a third-party website);

Complaint at 20, FTC v. Cure

Encapsulations, Inc., No. 1:19–cv–

00982 (E.D.N.Y. Feb. 26, 2019)

(Amazon.com reviews of defendants’

product were allegedly fabricated by

one or more third parties whom

defendants had paid to generate

reviews); Complaint at 19, FTC v.

Genesis Today, Inc., 1:15–cv–00062

(W.D. Tex. Jan. 26, 2015) (Amazon.com

product reviews allegedly purchased by

defendants); Complaint at 5, 8, FTC v.

Dunlevy, No. 1:11–cv–01226–TWT

(N.D. Ga. Apr. 4, 2011) (alleged fake

consumer comments).

State Attorneys General have also

brought cases challenging allegedly

fabricated consumer reviews. See, e.g.,

Complaint at 4, Washington v.

Alderwood Surgical Ctr., LLC, No. 2:22–

cv–01835 (W.D. Wash. Dec. 29, 2022)

(creating allegedly fake positive reviews

on Google, Yelp, and other review sites);

Complaint at 17–22, State v. Amazon

Home Warranty LLC, No. CV2021–

007632 (Ariz. Sup. Ct. Maricopa Cnty.

May 10, 2021) (disseminated or caused

the dissemination of allegedly fake

favorable consumer reviews on third-

party review websites, including on the

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Press Release, A.G. Schneiderman Announces

Agreement With 19 Companies To Stop Writing

Fake Online Reviews And Pay More Than $350,000

In Fines, Sept. 23, 2013, https://ag.ny.gov/press-

release/2013/ag-schneiderman-announces-

agreement-19-companies-stop-writing-fake-online-

reviews.

164

See, e.g., Competition Bureau Canada, ‘‘Honest

Advertising in the Digital Age,’’ Jan. 22, 2020,

https://www.canada.ca/en/competition-bureau/

news/2020/01/honest-advertising-in-the-digital-

age.html; UK Competition and Markets Authority,

‘‘CMA expects Facebook and eBay to tackle sale of

fake reviews,’’ June 21, 2019, https://www.gov.uk/

government/news/cma-expects-facebook-and-ebay-

to-tackle-sale-of-fake-reviews; Germany Federal

Cartel Office, ‘‘Bundeskartellamt launches sector

inquiry into user reviews,’’ May 23, 2019, https://

www.bundeskartellamt.de/SharedDocs/Meldung/

EN/Pressemitteilungen/2019/23_05_2019_SU_

Nutzerbwertungen.html; OECD, ‘‘Understanding

Online Ratings and Reviews’’ at 14–15 (2019),

https://www.oecd-ilibrary.org/science-and-

technology/understanding-online-consumer-ratings-

and-reviews_eb018587-en; OECD, ‘‘Good Practice

Guide on Online Consumer Ratings and Reviews’’

at 6 (2019) (noting evidence that some businesses

post fake reviews ‘‘on a large scale’’), http://

www.oecd.org/officialdocuments/

publicdisplaydocumentpdf/?cote=DSTI/CP(2019)5/

FINAL&docLanguage=En.

BBB’s website); Assurance of Voluntary

Compliance at 3–5, State v. Unified

Holding Grp., LLC, No. 2020–06785

(C.P. Cumberland Cnty., Pa. Dec. 16,

2020) (alleged fabricated reviews on the

BBB website); Complaint at 15, State v.

US Air Ducts & Sky Builders, Inc., No.

19–2–24757–6–SEA (Wash. Sup. Ct.

Kings Cnty., Sept. 20, 2019) (allegedly

created fake Google reviews); Complaint

at 8–9, State v. Mechs. Heating & Air

Conditioning, LLC, No. 13108809 (Ga.

Sup. Ct. Cobb Cnty., Oct. 11, 2013)

(alleged fake favorable customer

reviews, including on Yelp.com,

Kudzu.com, and Google+Local.com). In

September 2013, the New York Attorney

General’s office announced settlements

with 19 companies that allegedly either

purchased fake reviews or arranged to

have fake reviews posted for their

clients.

163

Numerous private lawsuits have

involved purportedly fake consumer

reviews. See, e.g., BHRS Grp., LLC v.

Brio Water Tech., Inc., 553 F. Supp. 3d

793, 797 (C.D. Cal. 2021) (defendant

allegedly enlisted individuals to

purchase products for the purpose of

leaving positive Amazon.com reviews of

its products and negative Amazon.com

reviews of plaintiff’s competing

products); Marksman Sec. Corp. v. P.G.

Sec., No. 19–62467–CIV–CAN, 2021

U.S. Dist. LEXIS 196580, at *43 (S.D.

Fla. Oct. 12, 2021) (denying plaintiff’s

motion for default and granting in part

its motion for summary judgment in a

case in which defendants paid for

positive Google reviews from at least

three individuals who never lived in a

building that a defendant serviced);

Rubinstein v. Ourian, No. 20–21948–

CIV–MORE, 2021 U.S. Dist. LEXIS

171799, at *3–4 (S.D. Fla. Sep. 10, 2021)

(order granting motions for summary

judgment on claims and counterclaims

in a case in which defendant allegedly

purchased negative reviews of plaintiff

plastic surgeon); RingCentral, Inc. v.

Nextiva, Inc., No. 19–cv–02626–NC,

2021 U.S. Dist. LEXIS 114042, at *7–8

(N.D. Cal. June 17, 2021) (order denying

plaintiff’s motion for summary

judgment, and granting in part

defendant’s motion for summary

judgment in a case in which plaintiff

alleged defendant posted fake positive

reviews for itself and fake negative

reviews of the plaintiff, and defendant

made similar allegations about plaintiff);

AlphaCard Sys. LLC v. Fery LLC, Civil

Action No. 19–20110 (MAS) (TJB), 2020

U.S. Dist. LEXIS 147059, at *2 (D.N.J.

Aug. 14, 2020) (denying defendant’s

motion to dismiss in a case in which

defendant allegedly ‘‘placed’’ hundreds

of phony Amazon.com customer

reviews on defendant’s products);

Stonecoat of Tex., LLC v. Procal Stone

Design, LLC, Civil Action No.

4:17CV303, 2019 U.S. Dist. LEXIS

153115, at *7–8 (E.D. Tex. July 25, 2019)

(denying motions for summary

judgment on claims and counterclaims,

and denying motion to strike

attachments in a case in which plaintiffs

allegedly directed employees and/or

representatives to submit fake

complaints/negative reviews about

defendant and post fake positive

reviews about plaintiff); Super Mario

Plumbing v. Belodedov, No. 2:17–cv–

02545–TLN–AC, 2018 U.S. Dist. LEXIS

24514, at *1–3 (E.D. Cal. Feb. 14, 2018)

(denying motion for preliminary

injunction in a case in which defendant

allegedly posted fake negative reviews

about competitor plaintiff); SA Luxury

Expeditions LLC v. Latin Am. for Less,

LLC, No. C 14–04085 WHA, 2014 U.S.

Dist. LEXIS 159520, at *1–2 (N.D. Cal.

Nov. 12, 2014) (motion to dismiss held

in abeyance in a case in which

defendant allegedly posted fake negative

consumer reviews about competitor

plaintiff).

The problem of fake reviews is not

limited to the United States. Regulators

in other countries, including Canada,

the United Kingdom, and Germany, as

well as international bodies like the

Organisation for Economic Co-operation

and Development (OECD), have all

stated fake reviews are a growing,

thriving, or substantial marketplace

problem.

164

The extent of fake reviews

outside of the United States lends

additional support to the conclusion

that fake reviews are prevalent, but the

Commission is not determining

prevalence based upon such facts.

The Commission has also challenged

allegedly fictitious consumer

testimonials that appear in advertising.

See, e.g., Complaint at 15, 17–18, FTC

v. Wellco, Inc., No. 1:21–cv–02081

(S.D.N.Y. Mar. 10, 2021) (testimonials

allegedly copied from competitors’

websites); Shop Tutors, Inc., 169 F.T.C.

476, 488–89 (2020) (allegedly fabricated

testimonials); Complaint at 14, 19, FTC

v. A.S. Resch., LLC (Synovia), No. 1:19–

cv–3423 (D. Colo. Dec. 5, 2019)

(allegedly fake testimonials); Complaint

at 20–22, 31, FTC v. Global Cmty.

Innovations LLC, No. 5:19–CV–00788

(N.D. Ohio Apr. 10, 2019) (allegedly

fake testimonials); Complaint at 12, 18,

FTC v. Fat Giraffe Mktg. Grp. LLC, No.

2:19–cv–00063–CW (D. Utah Jan. 29,

2019) (the people featured in

testimonials allegedly were not real

customers); FTC v. Cardiff, No. ED 18–

cv–02104–DMG (PLAx), 2020 U.S. Dist.

LEXIS 210930, at *15–16 (C.D. Cal. Oct.

9, 2020) (granting in part FTC motion

for summary judgment and finding

testimonialists in infomercial had not

used the product); Complaint at 12–13,

20, FTC v. Mktg. Architects, Inc., No.

2:18–cv–00050–NT (D. Me. Feb. 5, 2018)

(allegedly fake testimonials); Complaint

at 14, 21, FTC v. Health Res. Labs., LLC,

No. 2:17–cv–00467–JDL (D. Me. Nov.

30, 2017) (allegedly fake testimonials);

Complaint at 13, 18, 28, FTC v. XXL

Impressions LLC, No. 1:17–cv–00067–

NT (D. Me. Feb. 22, 2017) (defendants

allegedly did not know whether

consumer endorsers of their products

who appeared in their ads actually

exist); Complaint at 5, 7, 12–13, FTC v.

Anthony Dill, No. 2:16–cv–00023–GZS

(D. Me. Jan. 19, 2016) (allegedly fake

testimonials); First Amended Complaint

at 75, FTC v. Jeremy Johnson, No. 10–

cv–2203–RLH (GWF) (D. Nev. Feb. 25,

2013) (defendants allegedly hired third

parties to post fake positive online

articles and web pages purportedly by

consumers who had successfully used

defendants’ product to find government

grants); FTC v. Grant Connect, LLC, 827

F. Supp. 2d 1199, 1228 (D. Nev. 2011)

(granting summary judgment on FTC’s

deception count where defendants

presented no evidence showing certain

testimonials were genuine), aff’d in part

and vacated in part on other grounds,

763 F.3d 1094 (9th Cir. 2014);

Buckingham Prods., Inc., 106 F.T.C. 116

(1985) (testimonials allegedly do not

represent actual and genuine

testimonials from customers);

Technobrands, Inc., 133 F.T.C. 647, 650,

654–55 (2002) (purported consumer

endorsers allegedly did not exist); Plaza

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See Better Business Bureau, Subscription

Traps and Deceptive Free Trials Scam Millions with

Misleading Ads and Fake Celebrity Endorsements

(Dec. 12, 2018), https://www.bbb.org/article/

investigations/18929-subscription-traps-and-

deceptive-free-trials-scam-millions-with-

misleading-ads-and-fake-celebrity-endorsements.

166

See Randy Hutchinson, Opinion,

Endorsements by stars such as Ellen DeGeneres and

Sandra Bullock might be fake, The Tennessean, Jan.

8, 2020, https://www.tennessean.com/story/

opinion/2020/01/08/celebrity-endorsement-of-

products-could-be/2834860001/.

167

See Karen Hobbs, Did your favorite Shark

Tank celebrity really endorse THAT? Probably not,

Fed. Trade Comm’n Consumer Blog (Feb. 17, 2023),

https://consumer.ftc.gov/consumer-alerts/2023/02/

did-your-favorite-shark-tank-celebrity-really-

endorse-probably-not.

Club, Inc., 80 F.T.C. 62 (1972)

(testimonialist allegedly was not a

member of respondents’ physical fitness

facilities and unknown to respondents);

New Standard Publ’g. Co., Inc., 47

F.T.C. 1350, 1366 (1951) (some of the

testimonials and letters recommending

encyclopedia allegedly were not

genuine).

The use of fake celebrity

endorsements is widespread. A 2018

Better Business Bureau in-depth

investigative study found many

celebrity endorsements are fake.

165

According to one news report, Ellen

DeGeneres and Sandra Bullock both

sued 100 anonymous defendants who

fraudulently used their names in

promoting an anti-aging serum and

weight-loss products, and dozens of

other celebrities’ names have been

misappropriated in similar fashion.

166

The FTC has challenged numerous

allegedly false claims that specific

celebrities endorsed certain products,

services, or businesses. See, e.g.,

Complaint at 22–23, 27–28, 38–39, FTC

v. Effen Ads, LLC, No. 2:19–cv–00945–

RJS (D. Utah Nov. 26, 2019); Complaint

at 15, 19–20, 30–31, Global Cmty.

Innovations LLC, No. 5:19–CV–00788

(N.D. Ohio Apr. 10, 2019); Complaint at

5, 18–20, 22–23, 36, FTC v. Tarr, Inc.,

No. 3:17–cv–02024–LAB–KSC (S.D. Cal.

Oct. 3, 2017); Complaint at 12–13, FTC

v. Tachht, Inc., No. 8:16–cv–01397–

JDW–AEP (M.D. Fla. June 1, 2016);

Complaint at 13–15, 18, FTC v. Sales

Slash, LLC, No. CV15–03107 (C.D. Cal.

Apr. 27, 2015); Complaint at 2, 4–5,

Norm Thompson Outfitters, Inc., No. C–

4495 (Sept. 29, 2014); Complaint at 15–

17, FTC v. Central Coast Nutraceuticals,

Inc., No. 10 C 4931 (N.D. Ill. Aug. 5,

2010); The Raymond Lee Org., Inc., 92

F.T.C. 489 (1978) (use of the names,

photographs, and words of public

officials, including members of

Congress, allegedly misled consumers

that the officials recommended or

endorsed the business). Most recently,

FTC staff published a blog post to warn

consumers about scammers using fake

Shark Tank celebrity testimonials and

endorsements.

167

Consumer reviews and testimonials

that are not entirely fabricated can still

misrepresent the experiences of the

purported reviewers and testimonialists,

and such misrepresentations are

prevalent. This conclusion is reflected

in NAIMA’s comment, which asserted

testimonials by those misrepresenting

their experiences with products are

plentiful.

The Commission has challenged

many advertisements that allegedly

misrepresented endorsers’ experiences.

See, e.g., FTC v. Cardiff, 2020 U.S. Dist.

LEXIS 210930, at *15–16, 48

(testimonialists had already lost weight

without using the product); Complaint

at 14, 18, FTC v. A.S. Resch., LLC

(Synovia), No. 1:19–cv–3423

(testimonialists had allegedly used a

prior product formulation that

contained substantially different

ingredients); Complaint at 22, 25,

NextGen Nutritionals, LLC, No. 8:17–

cv–2807–T–36AEP (M.D. Fla. Jan. 9,

2018) (testimonials in ads allegedly did

not represent the actual experiences of

customers); Complaint at 22–24, 27,

FTC v. Russell T. Dalbey, No. 1:11–cv–

01396–CMA–KLM (D. Colo. May 26,

2011) (testimonials allegedly

misrepresented earnings from brokering

promissory notes using defendants’

system); FTC v. Data Med. Capital, Inc.,

No. SA CV 99–1266 AHS (EEx), 2010

U.S. Dist. LEXIS 3344, *27 (C.D. Cal.

Jan. 15, 2010) (testimonial for one

defendant recycled as a fictitious

testimonial for a different defendant);

Complaint at 17, FTC v. Advanced

Patch Techs., Inc., No. 104–CV–0670

(N.D. Ga. Mar. 10, 2004) (allegedly

testimonialists attributed their weight

loss to simply wearing the Pound A

Patch but were also provided supervised

exercise sessions three times per week);

Esrim Ve Sheva Holding Corp., 132

F.T.C. 736, 740 (2001) (testimonial from

respondent allegedly did not represent

his actual findings and experience with

the product); Computer Bus. Servs., Inc.,

123 F.T.C. 75, 78–79 (1997)

(testimonials by purchasers of home-

based business ventures allegedly did

not reflect their actual experiences);

Twin Star Prods., Inc., 113 F.T.C. 847,

853–54 (1990) (endorsement allegedly

did not reflect the honest opinions,

findings, beliefs, or experience of the

endorser); National Sys. Corp., 93 F.T.C.

58, 63–65 (1979) (some testimonials

were allegedly untrue); Federated

Sanitary Corp., 85 F.T.C. 130, 133

(1975) (alleging testimonials represented

to be from salesmen, franchisees, or

other distributors of respondents’

products were not made by such

individuals, and a substantial number of

purported testimonialists had never

dealt with the respondents); Natpac,

Inc., 79 F.T.C. 454, 459 (1971)

(testimonial letters were allegedly

prepared by respondents and signed

before the purported authors had

received the products and had time to

evaluate them); P. Lorillard Co., 46

F.T.C. 735, 740 (1950) (alleging

testimonials did not present or reflect

the actual personal experiences,

knowledge, or beliefs of the signers;

some testimonialists did not smoke Old

Gold cigarettes or any cigarettes; many

testimonials were prewritten by

respondent’s representatives; and many

were known by the respondent to be

false); R.J. Reynolds Tobacco Co., 46

F.T.C. 706, 731–32 (1950)

(endorsements communicated that

endorsers exclusively smoked Camel

cigarettes when they did not smoke

cigarettes, did not smoke Camels

exclusively, or could not tell the

difference between Camels and other

cigarettes).

Accordingly, based on the foregoing

evidence, the Commission concludes

fake consumer reviews and testimonials,

as well as reviews and testimonials that

otherwise misrepresent the experiences

of the reviewers and testimonialists, are

prevalent.

B. Consumer Review or Testimonial

Reuse or Repurposing

One type of review deception known

as ‘‘review hijacking’’ or ‘‘review reuse

fraud’’ appears to primarily or solely

affect online marketplaces with third-

party sellers, such as Amazon.com.

Vendors and third-party sellers on

Amazon’s platform can make their own

modifications to product pages, or

request Amazon’s assistance to do so,

using features referred to as ‘‘product

merging’’ and ‘‘product variation.’’

Products that are substantially similar

and that differ only in narrow, specific

ways—such as color, size, or quantity—

but that do not alter the core essence of

the item, such as a shirt that comes in

multiple colors and different sizes, may

share a variation relationship. Products

in a variation relationship share the

same product detail page. Each product

will appear as an alternative on the

product detail page, and, when a

shopper selects a different product in

the variation relationship, the content of

the product detail page, such as the

pictured product, may change. The

variation relationship enables buyers to

compare and choose among product

attributes from a single product detail

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168

See, e.g., Sara Spary, ‘‘Top-rated Amazon

headphones boosted by ‘fake reviews’ for toys,

mugs and umbrellas,’’ WHICH?, Apr. 7, 2022,

https://www.which.co.uk/news/2022/04/top-rated-

amazon-headphones-boosted-by-fake-reviews-for-

toys-mugs-and-umbrellas/; Timothy B. Lee,

‘‘Amazon still hasn’t fixed its problem with bait-

and-switch reviews,’’ ARS Technica, Dec. 20, 2020,

https://arstechnica.com/tech-policy/2020/12/

amazon-still-hasnt-fixed-its-problem-with-bait-and-

switch-reviews/; Jon Keegan, ‘‘Is This Amazon

Review Bullshit?,’’ The Markup, July 21, 2020,

https://themarkup.org/ask-the-markup/2020/07/21/

how-to-spot-fake-amazon-product-reviews; Josh

Dzieza, ‘‘Even Amazon’s own products are getting

hijacked by imposter sellers,’’ The Verge, Aug. 29,

2019, https://www.theverge.com/2019/8/29/

20837359/amazon-basics-fake-sellers-imposters-

third-party-marketplace; Jake Swearingen,

‘‘Hijacked Reviews on Amazon Can Trick

Shoppers,’’ Consumer Rep., Aug. 26, 2019, https://

www.consumerreports.org/customer-reviews-

ratings/hijacked-reviews-on-amazon-can-trick-

shoppers/; Nicole Nguyen, ‘‘Here’s Another Kind Of

Review Fraud Happening On Amazon,’’ Buzzfeed

News, May 29, 2018, https://

www.buzzfeednews.com/article/nicolenguyen/

amazon-review-reuse-fraud.

169

See Dzieza, ‘‘Even Amazon’s own products are

getting hijacked by imposter sellers,’’ supra note

168.

170

Oak & Shafiq Cmt. at 3–4.

171

Provencal Cmt. at 1.

172

He et al., ‘‘The Market for Fake Reviews,’’

supra note 158.

173

Australian Competition & Consumer

Commission, Online product and service reviews,

https://www.accc.gov.au/business/advertising-and-

promotions/online-product-and-service-reviews;

Danish Consumer Ombudsman, Guidelines on

publication of user reviews (2015), https://

www.forbrugerombudsmanden.dk/media/49717/

guidelines.pdf; United Kingdom Competition and

Markets Authority, Online reviews and

endorsements (2015), https://www.gov.uk/

government/consultations/online-reviews-and-

endorsements; OECD, Good Practice Guide on

Online Consumer Ratings and Reviews (2019),

https://www.oecd-ilibrary.org/science-and-

technology/good-practice-guide-on-online-

consumer-ratings-and-reviews_0f9362cf-en.

174

Trustpilot Cmt. at 7.

175

Monday Cmt. at 1.

page, thereby facilitating customer

choice and ease of shopping.

Some vendors and sellers abuse these

features by repurposing a listing page

for a product that has positive reviews

(e.g., a shower caddy or a jar of honey)

and using it to sell a completely

unrelated product (e.g., a phone charger

or a neck brace), thus inflating the star

rating for the latter—and going

unnoticed unless consumers read the

individual reviews closely. By

repurposing the page, the review

hijacker is implicitly misrepresenting

the repurposed reviews are for the

second product and the product has

more ratings and reviews than it does.

The review hijacker may also be

misrepresenting that the second product

has a higher average star rating or that

it has earned ‘‘Best Seller’’ or

‘‘Amazon’s Choice’’ badges. These

claims are unquestionably deceptive

and of no redeeming value to legitimate

marketers.

This problem has persisted since at

least 2018 and is prevalent as reflected

in reporting by Consumer Reports, The

Verge, Buzzfeed News, and others.

168

The reporting provides many examples

of review hijacking found on

Amazon.com across multiple product

categories. The author of the Consumer

Reports article stated that experts

believe it is an ‘‘acute problem’’ and

some legitimate Amazon.com sellers are

overwhelmed with fighting it. The Verge

article calls it a ‘‘common tactic’’ and

quotes a former Amazon employee as

saying ‘‘the problem is way bigger than

people realize.’’

169

The Commission recently brought its

first case involving this type of review

deception, suing a large vendor that

boosted its newly launched products on

Amazon.com. The vendor allegedly had

Amazon establish variation

relationships between the newer

products and successful, established

products that had more ratings and

reviews, high average ratings, or

‘‘Amazon’s Choice’’ or ‘‘#1 Best Seller’’

badges. See Complaint at 1–6, The

Bountiful Co., No. C–4791 (Apr. 10,

2023).

Accordingly, based on the foregoing

evidence, the Commission concludes

that the unfair or deceptive reuse or

repurposing of consumer reviews is

prevalent.

C. Buying Positive or Negative

Consumer Reviews

It is common for sellers or their agents

to give incentives in exchange for

reviews with the incentives conditioned

on the sentiment of the reviews. In the

review markets discussed in the

comments and described above,

prospective reviewers are offered free

merchandise or money in exchange for

5-star reviews. Social media groups for

procuring misleading reviews are

prevalent. The UC Davis researchers

found 242,000 products for which

Amazon sellers solicited incentivized

five-star Amazon.com reviews.

170

In

addition, the comment from the small

business employee said that a

competitor of the company for which

she worked is providing incentives for

5-star reviews.

171

In another academic

study, UCLA researchers analyzed these

review markets and resulting reviews on

Amazon.com and found the market for

fake reviews is large and the practice of

buying and selling reviews is

widespread.

172

The Commission has brought cases in

which a marketer allegedly provided an

incentive for a review or endorsement

that was required to be positive. See,

e.g., Complaint at 14, 19–20, FTC v. A.S.

Resch., LLC (Synovia), No. 1:19–cv–

3423 (allegedly offered consumer

endorsers free product in exchange for

‘‘especially positive and inspiring’’

reviews); Complaint at 5–6, 8, Urthbox,

Inc., No. C–4676 (Apr. 3, 2019)

(allegedly provided compensation for

the posting of positive reviews on the

BBB’s website and other third-party

websites); Complaint at 2–3,

AmeriFreight, Inc., No. C–4518 (Feb. 27,

2015) (allegedly past customers were

regularly encouraged to submit reviews

of respondent’s services in order to be

eligible for a $100 ‘‘Best Monthly

Review Award’’ given to ‘‘the review

with the most captivating subject line

and best content’’ and told that they

should ‘‘be creative and try to make

your review stand out for viewers to

read!’’).

Such conduct has also been

challenged in private actions. See, e.g.,

Marksman Sec. Corp. v. P.G. Sec., 2021

U.S. Dist. LEXIS 196580, at *4 (denying

plaintiff’s motion for default and

granting in part its motion for summary

judgment in which it was undisputed

that defendants paid for positive Google

reviews).

Regulators in Australia, Denmark, and

the United Kingdom, as well as the

OECD, have issued guidelines or

business guidance indicating companies

should not provide incentives for giving

positive reviews.

173

While it may lend

some additional support to the

conclusion that the acts or practices are

prevalent, the Commission is not

concluding that the conduct is prevalent

on the basis that other countries have

taken actions.

Accordingly, based on the foregoing

evidence, the Commission concludes

the giving of incentives for reviews

conditioned on the sentiment of the

reviews is prevalent.

D. Insider Consumer Reviews and

Testimonials

It is quite common for a company’s

owners, officers, managers, executives,

employees, agents, or their relatives, to

write consumer reviews or testimonials

of its products or services.

According to Trustpilot, in 2021,

more than 8,000 reviews for U.S.

businesses were written by their

owners, officers, or employees, or their

family members.

174

In addition, an

individual commenter complained of

having relied upon misleading reviews

written by a business’s employees or

their spouses before selecting an auto

repair shop.

175

The Commission has challenged

numerous instances of deceptive

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reviews allegedly written by company

insiders. See, e.g., Complaint at 21, 26–

27, United States v. Vision Path, Inc.,

No. 1:22–cv–00176 (D.D.C. Jan. 25,

2022) (allegedly an executive of the

company wrote a review on a third-

party site and the co–CEO posted a

public response thanking the reviewer);

Complaint at 2–4, Sunday Riley Modern

Skincare, LLC, No. C–4729 (Nov. 6,

2020) (company owner and managers

allegedly asked company employees to

write product reviews on third-party

retailer’s website); Creaxion Corp., 167

F.T.C. 71, 78–79 (2019) (company

allegedly conducted program that

reimbursed individuals, including the

CEO and other company employees, for

purchasing its product and posting

online reviews); Complaint at 5–6, 8–9,

Mikey & Momo, Inc., No. C–4655 (May

3, 2018) (Amazon.com reviews allegedly

written by company officer and her

relatives); Complaint at 10, 12, FTC v.

Aura Labs, Inc., No. 8:16–cv–02147

(C.D. Cal. Dec. 12, 2016) (app store

review and website testimonials

allegedly written by CEO or relatives of

Chairman); Complaint at 25–27, 32–33,

FTC v. Universal City Nissan, Inc., No.

2:16–cv–07329 (C.D. Cal. Sept. 29, 2016)

(customer reviews on third-party

websites allegedly written by managers);

Complaint at 10, United States v.

Spokeo, Inc., No. 2:12–cv–05001–

MMM–SH (C.D. Cal. June 7, 2012)

(allegedly defendant directed its

employees to draft and post comments

endorsing its products on news and

technology websites; and comments

were reviewed and edited by managers

and then posted using account names

provided by defendant); Reverb

Commc’ns, Inc., 150 F.T.C. 782, 783–84

(2010) (owner of public relations

agency, her managers, and employees

allegedly wrote iTunes store reviews for

clients’ games).

At least one State Attorney General

has challenged alleged insider reviews.

See Complaint at 15, State v. US Air

Ducts & Sky Builders, Inc., No. 19–2–

24757–6–SEA (Wash. Sup. Ct. Kings

Cnty., Sept. 20, 2019) (Google reviews

allegedly written by employees,

relatives of employees, and the business

owner).

The Commission has also challenged

testimonials allegedly written by

insiders in numerous instances. See,

e.g., Complaint at 15, 19–20, FTC v.

Health Ctr., Inc., No. 2:20–cv–00547 (D.

Nev. Mar. 19, 2020) (defendants

allegedly used testimonials from their

employees that purported to be from

ordinary consumers); Complaint at 14,

19, FTC v. A.S. Resch., LLC (Synovia),

No. 1:19–cv–3423 (D. Colo. 2019) (ads

allegedly included a testimonial by a 50

percent owner and officer); Complaint at

21, 25–26, FTC v. NutriMost LLC, No.

2:17–cv–00509–NBF (W.D. Pa. Apr. 20,

2017) (testimonials in ads were

allegedly from licensees or franchisees,

their relatives, or their employees);

Deutsch LA, Inc., 159 F.T.C. 1163,

1168–69 (2015) (public relations firm

allegedly asked employees to tweet

about client’s product); Complaint at 19,

21, FTC v. Genesis Today, Inc., No.

1:15–cv–00062 (W.D. Tex. Jan. 26, 2015)

(allegedly defendants’ promotional

materials linked to video testimonials

by purported users of their weight-loss

products that were provided by their

employees); Complaint at 17, FTC v.

Advanced Patch Techs., Inc., No. 104–

CV–0670 (N.D. Ga. Mar. 10, 2004)

(shopping mall segment of infomercial

with testimonials from ‘‘real people’’

allegedly included at least one

employee of the defendants or their

agents); Brake Guard Prods., Inc., 125

F.T.C. 138, 191 (1998) (published

testimonial was allegedly from a dealer/

distributor of the product); Gisela Flick,

116 F.T.C. 1108, 113–14 (1993) (alleged

infomercial endorsement by company’s

Athletic Director); Cliffdale Assocs.,

Inc., 103 F.T.C. 110, 144–45, 172 (1984)

(testimonials were allegedly by business

associates or relatives).

Accordingly, based on the foregoing

evidence, the Commission concludes

the use of consumer reviews and

testimonials written by company

insiders—that is, consumer reviews and

testimonials written by a company’s

owners, officers, managers, executives,

employees, agents, or their relatives—is

prevalent.

E. Company-Controlled Review Websites

or Entities

Numerous businesses have set up

purportedly independent websites,

organizations, or entities that review or

endorse their own products.

In numerous cases, the Commission

has challenged sellers who allegedly

misrepresented that the websites they

controlled provided independent

opinions of products. See, e.g.,

Complaint at 2, 8–9, Son Le, No. C–4619

(May 31, 2020) (respondents allegedly

operated purportedly independent

websites that reviewed their own

trampolines); FTC v. Roca Labs, Inc.,

345 F. Supp. 3d 1375, 1389–90 (M.D.

Fla. 2018) (defendants operated a

purportedly independent, objective

website that endorsed defendants’

products); Complaint at 21–25, 28, FTC

v. NourishLife, LLC, No. 1:15–cv–00093

(N.D. Ill. Jan. 7, 2015) (defendants

allegedly operated a purportedly

independent, scientific research website

that endorsed a supplement sold only

by defendants).

The Commission has also challenged

sellers who allegedly created

purportedly independent organizations

or entities that supposedly reviewed or

approved their products or services.

See, e.g., Complaint at 3–5, Bollman Hat

Co., No. C–4643 (Jan. 23, 2018)

(respondents allegedly created a U.S.-

origin seal misrepresenting that an

independent organization endorsed

their products as made in the United

States); Complaint at 18–20, 26,

NextGen Nutritionals, LLC, No. 8:17–

cv–2807–T–36AEP (M.D. Fla. Jan. 9,

2018) (alleged misrepresentation that

sites displaying the Certified Ethical

Site Seal were verified by an

independent, third-party program);

Complaint at 2–4, Moonlight Slumber,

LLC, No. C–4634 (Sept. 28, 2017)

(respondent represented its baby

mattresses had been certified by Green

Safety Shield and failed to disclose the

shield was its own designation);

Complaint at 4–6, Benjamin Moore &

Co., Inc., No. C–4646 (July 11, 2017)

(respondent allegedly used a ‘‘Green

Promise’’ seal of its own creation to

misrepresent that paints had been

endorsed or certified by independent

third party); Complaint at 2–4, ICP

Constr. Inc., No. 4648 (July 11, 2017)

(same); Complaint at 2–3, Ecobaby

Organics, Inc., No. C–4416 (July 25,

2013) (manufacturer allegedly

misrepresented that seal-providing

association was an independent, third-

party certifier when it created and

controlled that association); Nonprofit

Mgmt. LLC, 151 F.T.C. 144, 148–49

(2011) (respondents allegedly

misrepresented their seal program was

endorsed by two independent

associations when respondents owned

and operated them); Complaint at 34,

37, FTC v. A. Glenn Braswell, No. 2:03–

cv–03700–DT–PJW (C.D. Cal. May 27,

2003) (defendants allegedly established

the Council on Natural Nutrition and

then misrepresented it was an

independent organization of experts

who had endorsed defendants’

products); Nat’l Media Corp., 116 F.T.C.

549, 559–60 (1993) (respondents

allegedly claimed the National

Association of Advertising Producers

was an existing, independent

organization that evaluates commercials

for their integrity and excellence);

Revco, D.S., Inc., 67 F.T.C. 1158, 1163,

1208–18, 1250–51 (1965) (respondents

allegedly created and controlled

Consumer Protective Institute and gave

their products its seal of approval).

Accordingly, based on the foregoing

evidence, the Commission concludes

the practice of marketers setting up

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176

Trustpilot Cmt. at 8.

177

See https://www.ftc.gov/system/files/

documents/closing_letters/nid/202_3039_yotpo_

closing_letter.pdf.

178

See id.

179

See ‘‘HealthEngine to pay $2.9 million for

misleading reviews and patient referrals,’’

Australian Competition & Consumer Commission,

Aug. 20, 2020, https://www.accc.gov.au/media-

release/healthengine-to-pay-29-million-for-

misleading-reviews-and-patient-referrals.

180

See ‘‘Aveling Homes ordered to pay penalties

of $380,000 for misleading review websites,’’

Australian Competition & Consumer Commission,

Nov. 30, 2017, https://www.accc.gov.au/media-

release/aveling-homes-ordered-to-pay-penalties-of-

380000-for-misleading-review-websites.

181

See ‘‘Bachcare fined for removing negative

comments in online reviews,’’ RNZ, Dec. 20, 2019,

https://www.rnz.co.nz/news/national/405929/

bachcare-fined-for-removing-negative-comments-in-

online-reviews.

182

See ‘‘Retailer hosting reviews on its website:

improvement of practices,’’ Competition and

Markets Authority, Aug. 11, 2016, https://

www.gov.uk/cma-cases/retailer-hosting-reviews-on-

its-website-improvement-of-practices.

183

See Directive (EU) 2019/2161 of the European

Parliament and of the Council, Nov. 27, 2019,

https://eur-lex.europa.eu/eli/dir/2019/2161/oj.

184

Yelp Cmt. at 11.

185

Trustpilot Cmt. at 9.

186

Ubiquitous Advising Cmt. at 1.

187

Transparency Company Cmt. at 16.

188

See FTC v. Roca Labs, Inc., 345 F. Supp. 3d

at 1393–96.

189

See Complaint at 8–10, 12, FTC v. World

Patent Mktg., Inc., No. 1:17–cv–20848–DPG (S.D.

Fla. Mar. 6, 2017).

190

Id. at 9.

191

Id.

purportedly independent websites,

organizations, or entities to review or

endorse their own products is prevalent.

F. Review Suppression

The ANPR addressed two types of

review suppression. One type involves

a seller’s website representing that the

consumer reviews displayed represent

most or all of the reviews submitted

when, in fact, reviews are being

suppressed based upon their negativity.

Trustpilot commented that it was aware

of the suppression of negative reviews

on retailer or business websites.

176

In a recent case, the Commission

alleged a retailer suppressed hundreds

of thousands of 1-, 2-, and 3-star reviews

submitted to its website. See Complaint

at 1–2, Fashion Nova, LLC, No. C–4759

(Mar. 18, 2022). Staff also publicly

addressed this issue in a 2020 closing

letter to Yotpo, the company that

provided review management services

to Fashion Nova and numerous other

merchants.

177

FTC staff’s investigation

of Yotpo revealed more than 4,500

Yotpo merchant clients were only

automatically publishing 4- or 5-star

reviews. Of the 1-star reviews submitted

to merchants not automatically

publishing 1-star reviews, just 21

percent were published; and of the 2-

star reviews submitted to merchants not

automatically publishing 2-star reviews,

just 31 percent were published. After

FTC staff began investigating Yotpo, it

implemented clear and prominent

guidance to its clients on their need to

promptly post reviews, including

negative reviews, and began to

automatically post negative reviews that

have not been promptly reviewed and

acted upon by its clients.

178

Foreign consumer protection entities

have brought several actions involving

companies that prevented the

publication of negative reviews. An

online health-care booking service in

Australia, which published patient

reviews, admitted it did not publish

approximately 17,000 reviews and

edited another 3,000 reviews either to

remove negative aspects or to embellish

positive aspects.

179

An Australian court

found a home building company held

back bad reviews from its review

websites to give a more favorable

impression of its services.

180

A New

Zealand holiday home rental website

pleaded guilty and was fined for

removing negative comments about

rental properties and its maintenance

and management of them, and not

publishing any reviews that gave a

rating below 3.5 stars.

181

The United

Kingdom’s Competition and Markets

Authority secured an undertaking from

an online knitwear retailer that did not

publish all genuine, relevant, and lawful

reviews submitted by its customers.

182

The problem is sufficiently prevalent

that an EU Directive prohibits

‘‘publishing only positive reviews and

deleting the negative ones.’’

183

These

foreign actions lend additional support

to the conclusion that the conduct is

prevalent, but the Commission is not

determining prevalence based upon

such actions.

The other type of review suppression

addressed in the ANPR is suppression

by unjustified legal threat or physical

threat. The comments in response to the

ANPR support a determination that

such review suppression is prevalent.

Yelp said it ‘‘constantly confronts’’ the

use of ‘‘abusive and questionable or

unjustified legal threats’’ to suppress

reviews.

184

Trustpilot has seen cases,

mostly outside of the United States,

where businesses have threatened

consumers if they do not delete negative

reviews.

185

A comment from Ubiquitous

Advising described a company in its

local area that is constantly threatening

and bullying reviewers in order to

suppress bad reviews.

186

The

Transparency Company said every year

thousands of lawyers are hired to

intimidate the authors of negative

reviews.

187

In a case against Roca Labs, Inc., the

Commission successfully challenged as

unfair the defendants’ threats to

enforce—and their actual enforcement

of—non-disparagement clauses in form

contracts that were intended to suppress

customers’ negative reviews.

188

A

subsequent FTC case against World

Patent Marketing challenged alleged

review suppression through physical

intimidation as unfair.

189

According to

the Commission’s complaint, the

defendants in that matter ‘‘cultivate[d] a

threatening atmosphere through emails

to would-be complainants.’’

190

For

example, they distributed, through an

email to all of their then-existing

customers, a blog post discussing an

incident that purportedly occurred in

their offices: A consumer that allegedly

wanted to speak with them about an

invention idea was stopped, detained,

and expelled by their ‘‘intimidating

security team, all ex-Israeli Special Ops

and trained in Krav Maga, one of the

most deadly of the martial arts.’’

191

The

post continued: ‘‘The World Patent

Marketing Security Team are the kind of

guys who are trained to knockout first

and ask questions later.’’

State Attorneys General have also

challenged the alleged use of unjustified

legal threats in attempts to have

consumers remove negative reviews.

See, e.g., Complaint at 12–14, Maine v.

Liberty Bell Moving & Storage, Inc.,

2:2022cv00204 (D. Me. July 8, 2022);

Complaint at 4, Washington v.

Alderwood Surgical Ctr., LLC.

A State Attorney General challenged

the alleged suppression of negative

reviews through intimidation, albeit not

physical intimidation, and false

accusations. Complaint at 5–7 and

Appendices A–C, State v. Mechs.

Heating & Air Conditioning, LLC

(alleged publishing or threatening to

publish the names, home addresses,

telephone numbers, email addresses,

and photographs of consumers who

wrote negative reviews, together with

accusations that the consumers engaged

in illegal or unethical activities or

otherwise maligning their character).

Accordingly, based on the foregoing

evidence, the Commission concludes

the types of review suppression

discussed above are prevalent.

G. Indicators of Social Media Influence

In order to sell or market themselves

or their products or services, some

individuals and businesses misrepresent

their social media influence by buying

fake followers, fake subscribers, fake

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See Complaint at 5, FTC v. Devumi, LLC, No.

9:19–cv–81419–RKA (S.D. Fla. Oct. 18, 2019).

193

Id. at 5.

194

Id. at 3–4.

195

Complaint at 4, Washington v. Alderwood

Surgical Ctr., LLC.

196

Complaint at 1, 5–9, Facebook, Inc. v. Arend

Nollen, No. 3:19–cv–02262 (N.D. Cal. Apr. 25,

2019).

197

Id. at 8–9.

198

See Social Media Bots and Deceptive

Advertising: Federal Trade Commission Report to

Congress, https://www.ftc.gov/system/files/

documents/reports/social-media-bots-advertising-

ftc-report-congress/socialmediabotsreport.pdf.

199

Id. at 5.

200

See NATO Strategic Communications Centre

of Excellence, ‘‘Social Media Manipulation 2022/

2023: Assessing the Ability of Social Media

Companies to Combat Platform Manipulation,’’

January 2023, https://stratcomcoe.org/publications/

social-media-manipulation-20222023-assessing-the-

ability-of-social-media-companies-to-combat-

platform-manipulation/272. See also Johan

Lindquist and Esther Weltevrede, ‘‘Negotiating

Authenticity in the Market for Fake Followers on

Social Media,’’ Social Science Research Council,

Oct. 5, 2021 (describing ability of manipulation

services to evade platform detection), https://

items.ssrc.org/beyond-disinformation/negotiating-

authenticity-in-the-market-for-fake-followers-on-

social-media/; Joseph Cox, ‘‘All of My TikTok

Followers Are Fake,’’ Vice Motherboard, Aug. 13,

2020 (describing the speed and ease of buying fake

followers in bulk), https://www.vice.com/en/article/

z3e8na/get-buy-tiktok-followers-likes-views-cheap-

easy.

201

See Maria Castaldo et al., ‘‘Doing data science

with platforms crumbs: an investigation into fakes

views on YouTube,’’ Sep. 28, 2022, https://doi.org/

10.48550/arXiv.2210.01096.

202

See AMG Cap. Mgmt., LLC v. FTC, 141 S. Ct.

1341, 1352 (2021).

203

See ANPR, 87 FR at 67425 & n.1 (discussing

AMG Cap. Mgmt.).

204

See 15 U.S.C. 57b(a)(2) (‘‘If the Commission

satisfies the court that the act or practice to which

the cease-and-desist order relates is one which a

reasonable man would have known under the

circumstances was dishonest or fraudulent, the

court may grant relief.’’).

205

Compare 15 U.S.C. 57b(a)(1) (rule violations),

with id. 57b(a)(2) (Section 5 violations).

views, and other similar inauthentic

indicators of such influence.

The Commission addressed the

alleged sale and use of such fake and

inauthentic indicators in complaint

against Devumi, LLC.

192

In that matter,

the Commission alleged that, by selling

and distributing these indicators to

users of various social media platforms,

the defendants enabled the purchasers

to ‘‘exaggerate and misrepresent their

social media influence,’’ thereby

providing the means and

instrumentalities for the purchasers to

engage in deception.

193

For example,

the defendants allegedly sold fake

Twitter followers to actors, athletes,

musicians, writers, and other

individuals who wanted to increase

their appeal as influencers and to

motivational speakers, law firm

partners, investment professionals,

experts, and other individuals who

wanted to boost their credibility to

potential clients for their services.

194

At least one State Attorney General

has brought a case challenging the

alleged misuse of fake indicators of

social media influence for commercial

purposes. In December 2022, the

Washington State Attorney General filed

suit against a plastic surgery provider

accused of buying tens of thousands of

fake ‘‘followers’’ on Instagram and

thousands of fake ‘‘likes’’ on Instagram

and other social media to create a false

appearance of popularity in its

advertising to consumers.

195

Platforms have also sued the sellers of

fake indicators of social media

influence. In April 2019, Facebook, Inc.,

and Instagram LLC sued the operators of

websites offering fake engagement

services.

196

The operators allegedly

used a network of computers or ‘‘bots’’

and Instagram accounts to provide fake

‘‘likes,’’ ‘‘views,’’ and ‘‘followers’’ to

their customers’ Instagram accounts.

197

Both the FTC and an independent

organization have analyzed bots,

inauthentic social media accounts, and

fake followers. In July 2020, the

Commission issued a report to Congress,

titled ‘‘Social Media Bots and Deceptive

Advertising.’’

198

The report stated

social media companies have reported

removing or disabling billions of

inauthentic accounts, the online

advertising industry has taken steps to

curb bot and influencer fraud, and the

computing community is designing

sophisticated social bot detection

methods, but nonetheless, use of social

media bots remains a serious issue.

199

A

2023 report by the NATO Strategic

Communications Centre of Excellence,

which analyzed the market for

inauthentic social media accounts and

fake followers for several years, found it

is as fast and cheap to buy them now as

several years ago, and the platforms’

ability to detect and remove them is

declining overall.

200

Citing TikTok’s

own reports that it had removed 1.4

billion fake followers in the second

quarter of 2022, the researchers stated

the total number of fake followers on

that platform during that period was

likely much higher, given their

experiments found only five percent of

all purchased fake engagement was

identified and removed in a four-week

period. Further, in a 2022 study,

researchers found that fake views of

YouTube videos are widespread, and

that the platform does not correct them

quickly.

201

Accordingly, based on the foregoing

evidence, the Commission concludes

the sale and misuse of fake indicators of

social media influence for commercial

purposes is prevalent.

IV. Reasons for the Proposed Rule on

the Use of Consumer Reviews and

Testimonials

The Commission believes the

proposed Rule will substantially

improve its ability to combat certain

specified, clearly unfair or deceptive

acts or practices involving consumer

reviews or testimonials. Although such

practices are already unlawful under

Section 5 of the FTC Act, which

prohibits unfair or deceptive acts or

practices, the proposed Rule may

increase deterrence against these

practices in the first instance and will

allow the Commission to seek civil

penalties against the violators and more

readily obtain monetary redress for their

victims. As discussed below, the

proposed Rule would accomplish these

goals without significantly burdening

honest businesses and provide benefits

to consumers and honest competitors.

The Commission’s objective in

commencing this rulemaking is to deter

certain clearly unfair or deceptive acts

or practices involving consumer reviews

or testimonials, and expand the

remedies available to it in instances

where such practices are uncovered. A

recent U.S. Supreme Court decision,

202

which overturned 40 years of precedent

from the U.S. Circuit Courts of Appeal

uniformly holding that the Commission

could take action under Section 13(b) of

the FTC Act, 15 U.S.C. 53(b), to return

money unlawfully taken from

consumers through unfair or deceptive

acts or practices, has made it

significantly more difficult for the

Commission to return money to injured

consumers.

203

Without Section 13(b) as

it had historically been understood, the

only method the Commission has to

return money unlawfully taken from

consumers is Section 19 of the FTC Act,

15 U.S.C. 57b, which provides two

paths for consumer redress. The longer

path, under Section 19(a)(2), requires

the Commission to first issue a final

cease-and-desist order—including any

resulting appeal. Then, to recover

money for consumers, the Commission

must prove separately in Federal court

that the violator engaged in fraudulent

or dishonest conduct.

204

The shorter

path to monetary relief is under Section

19(a)(1), which allows the Commission

to recover redress directly through a

Federal court action and is available

only when the Commission alleges

violation of a rule.

205

None of the

Commission’s cases challenging

deceptive consumer reviews or

testimonials has involved other

misconduct for which the Commission

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The definition of a consumer testimonial is

based upon the definition of an ‘‘endorsement’’ in

the Commission’s Guides Concerning the Use of

Endorsements and Testimonials in Advertising. See

Guides Concerning the Use of Endorsements and

Testimonials in Advertising, 16 CFR 255.0(b).

207

Google Cmt. at 9.

208

NRF Cmt. at 6.

209

Trustpilot Cmt. at 3–4; NRF Cmt. at 6.

210

NRF Cmt. at 1, 7.

sought civil penalties under any of the

rules it enforces.

In addition, the longer path to redress

under Section 19(a)(2) provides relief

only to redress consumer injury, which

may be difficult to quantify in certain

circumstances. By contrast, with a rule

violation, the shorter path to redress

under Section 19(a)(1) also gives the

Commission the ability to obtain civil

penalties, which punish the wrongdoer,

provide general and specific deterrence,

and do not require quantifiable proof of

consumer injury.

Outlawing egregious review and

testimonial practices by rule expands

the Commission’s enforcement toolkit

and allows it to deliver on its mission

by stopping and deterring harmful

conduct and, in some cases, making

American consumers whole when they

have been wronged. Because fake

reviews and the other unfair or

deceptive review and testimonial

practices described here are so prevalent

and so harmful, the unlocking of

additional remedies through this

rulemaking, particularly the ability to

seek civil penalties against violators and

obtain redress for consumers or others

injured by the conduct, will allow the

Commission to more effectively police

harmful review and testimonial

practices that plague consumers and

honest businesses.

V. Overview and Scope of Proposed

Rule on the Use of Consumer Reviews

and Testimonials

A. Key Definitions

Proposed § 465.1 would provide

definitions for 12 terms as they appear

in proposed 16 CFR part 465, including,

among others, definitions for the terms

‘‘consumer reviews,’’ ‘‘consumer

testimonials,’’ and ‘‘celebrity

testimonials.’’

The term ‘‘consumer review’’ is

defined in proposed § 465.1(d) as a

consumer’s evaluation, or a purported

consumer’s evaluation, of a product,

service, or business that is submitted by

the consumer, or purported consumer,

and that is published to a website or

platform dedicated in whole or in part

to receiving and displaying such

reviews. The definition states that

consumer reviews include consumer

ratings, regardless of whether they

include any text or narrative.

The definition includes ‘‘purported

consumers’’ so that it covers reviews by

authors who do not exist. It does not

include all consumer evaluations of

products or services, such as a blog post

or other social media post evaluating a

product; it is limited to those submitted

to a website or platform or portion

thereof dedicated to such reviews. Such

websites and platforms would include,

among other things, third-party review

platforms and advertiser and retailer

websites that collect and display

consumer reviews. A consumer review

submitted and published to one website

that is republished on a second website

is still a consumer review as

republished. A consumer review is not

necessarily advertising.

The term ‘‘consumer testimonial’’ is

defined in proposed § 465.1(e) as an

advertising or promotional message that

consumers are likely to believe reflects

the opinions, beliefs, or experiences of

a consumer who has purchased, used, or

otherwise had experience with a

product, service, or business.

206

Proposed § 465.1(b) provides a

corresponding definition of the term

‘‘celebrity testimonial.’’ It defines the

term ‘‘celebrity testimonial’’ as an

advertising or promotional message that

consumers are likely to believe reflects

the opinions, beliefs, or experiences of

a well-known person who purchased,

used, or otherwise had experience with

a product, service, or business.

B. Fake or False Consumer Reviews,

Consumer Testimonials, or Celebrity

Testimonials

Proposed § 465.2 would prohibit

certain types of deceptive conduct

involving ‘‘consumer reviews,’’

‘‘consumer testimonials,’’ and ‘‘celebrity

testimonials.’’

Proposed § 465.2(a) would prohibit a

business from writing, creating, or

selling a consumer review, consumer

testimonial, or celebrity testimonial

that: (a) is by someone who does not

exist; (b) is by someone who did not use

or otherwise have experience with the

product, service, or business that is the

subject of the review or testimonial; or

(c) materially misrepresents the

reviewer’s or testimonialist’s experience

with the product, service, or business.

Proposed § 465.2(b) would render it a

deceptive act or practice for a business

to purchase consumer reviews, or

disseminate or cause the dissemination

of consumer or celebrity testimonials,

about the business or one of its products

or services, if the business knew or

should have known that the review or

testimonial: (a) was by someone who

does not exist, (b) is by someone who

did not use or otherwise have

experience with the product, service, or

business, or (c) materially misrepresents

the reviewer’s or testimonialist’s

experience with the product, service, or

business. In accordance with proposed

§ 465.1(h), ‘‘purchase a consumer

review’’ means to provide something of

value, such as money, goods, or another

review, in exchange for a consumer

review.

Proposed § 465.2(c) would make it a

deceptive act or practice for a business

to procure consumer reviews about the

business or one of its products or

services for posting on a third-party

platform or website, if the business

knew or should have known that the

review: (a) was by someone who does

not exist, (b) is by someone who did not

use or otherwise have experience with

the product, service, or business, or (c)

materially misrepresents the reviewer’s

experience with the product, service, or

business.

Google’s comment said a proposed

rulemaking should not apply to review

platforms.

207

Proposed § 465.2 accounts

for this concern. The provision does not

apply to businesses, like third-party

review platforms, that disseminate

consumer reviews that are not of their

products, services, or businesses.

Neither does it apply to any reviews that

a platform simply publishes and that it

did not purchase.

NRF opposed requiring the manual

review of every consumer review and

poster’s profile.

208

Proposed § 465.2

accounts for this concern by not

imposing any obligation on those

publishing consumer reviews to

manually review consumer reviews or

poster profiles and by not applying to

reviews that a platform simply

publishes.

Trustpilot asserted any rule should

consider a consumer review to be

legitimate if the consumer had

experience with the business, even if no

purchase was made, and NRF’s

comment opposed requiring retailers to

restrict consumer reviews to verified

purchasers.

209

In light of these concerns,

proposed § 465.2 does not limit

legitimate reviews to reviews by

purchasers or verified purchasers. It

requires only that the reviewer had

experience with the product, service, or

business.

NRF also recommended any rule

provision addressing fake reviews be

limited to review brokers and not apply

to the parties purchasing the reviews.

210

It said that buyers of fake reviews

should not be covered by a rule because

the Commission can already bring a

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Id. at 6.

212

ANA Cmt. at 7.

213

See Endorsement Guides, 16 CFR 255.2(e)(11)

(review gating ‘‘may be an unfair or deceptive

practice if it results in the posted reviews being

substantially more positive than if the marketer had

not engaged in the practice’’) and 16 CFR 255.2(d).

214

Family First Life Cmt. at 12–13.

215

See, e.g., Endorsement Guides, 16 CFR

255.5(b)(6)(ii) (any resulting review that fails to

clearly and conspicuously disclose the incentives

provided to that reviewer is likely deceptive).

216

See Fed. Trade Comm’n, NPRM: Negative

Option Rule, 88 FR 24716, 24734 (Apr. 24, 2023),

https://www.govinfo.gov/content/pkg/FR-2023-04-

24/pdf/2023-07035.pdf.

217

NADA Cmt. at 3.

‘‘formal enforcement action seeking

monetary damages,’’ and it was not

opposed to Commission action against

such purchasers.

211

The Commission

believes a rule should indeed apply to

those who knowingly purchase fake

reviews given that they are no less

culpable for deceiving consumers than

the brokers. The Commission’s ability to

seek monetary relief without a rule

applies to both brokers and buyers, and

it does not obviate the need for a rule

because, as discussed above, seeking

such relief is much more difficult

without a rule.

C. Consumer Review Repurposing

Proposed § 465.3 would prohibit a

business from using or repurposing, or

causing the use or repurposing of, a

consumer review written or created for

one product so it appears to have been

written or created for a substantially

different product. This could consist of

combining substantially different

products so that they share consumer

reviews or changing a product page so

it features a different product but retains

the reviews of the prior product, or

copying reviews of other products from

other sites. The term ‘‘substantially

different product’’ is defined in

proposed § 465.1(j), which establishes

that the term refers to a product that

differs from another product in one or

more material attributes other than

color, size, count, or flavor. Although

differences in flavor are likely to be

material to some consumers in some

instances, the question can be highly

fact specific. For this reason, combining

reviews for a product that has multiple

flavors would not be a rule violation,

though it could still be a deceptive

practice under the FTC Act.

D. Buying Positive or Negative

Consumer Reviews

Proposed § 465.4 would prohibit a

business from offering 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, regarding the product,

service, or business that is the subject of

the review.

ANA’s comment asserted any

proposed rulemaking should not

address ‘‘review gating’’ or the ‘‘mere

solicitation of positive reviews.’’

212

Review gating occurs when a business

asks past purchasers to provide

feedback on a product and then invites

only those who provide positive

feedback to post online reviews on one

or more websites. Review gating and the

mere solicitation of positive reviews are

not covered by the proposed Rule.

Although the Commission believes

review gating can be deceptive,

213

whether any given instance of review-

gating is deceptive can be highly fact

specific.

Family First Life commented that the

FTC should not promulgate a rule ‘‘that

sweeps in and penalizes any review just

because the reviewer was offered an

incentive to write it . . . without

otherwise dictating what the review

says.’’

214

The proposed Rule does not

address incentivized reviews except for

those required to express a particular

sentiment, but the Commission notes

that other uses of incentivized reviews

can be deceptive and violate the FTC

Act.

215

The deceptiveness of

undisclosed incentivized reviews is

highly fact specific.

E. Insider Consumer Reviews and

Consumer Testimonials

Proposed § 465.5 addresses company

insider consumer reviews and consumer

testimonials in three different ways.

Proposed § 465.5(a) applies to insider

reviews and testimonials; proposed

§ 465.5(b) applies to insider

testimonials; and proposed § 465.5(c)

applies to insider reviews.

Proposed § 465.5(a) would prohibit an

officer or manager of a business from

writing or creating a consumer review or

consumer testimonial about the

business or its products or services if

the consumer review or consumer

testimonial does not have a clear and

conspicuous disclosure of the officer’s

or manager’s relationship to the

business. Proposed § 465.1(c) defines

‘‘clear and conspicuous’’ to mean that a

required disclosure is easily noticeable

(i.e., difficult to miss) and easily

understandable by ordinary consumers,

including in all of the ways listed in the

definition. This is the same definition

the Commission proposed in its

Negative Option Rule Notice of

Proposed Rulemaking.

216

In accordance

with proposed § 465.1(g), ‘‘officers’’ are

defined to include a business’s owners,

executives, and managing members.

Proposed § 465.5(b) applies to

consumer testimonials in

advertisements disseminated by or on

behalf of a business. It would prohibit

a business from disseminating or

causing the dissemination of certain

consumer testimonials about the

business or its products or services if

the consumer testimonial is written by

the business’s officers, managers,

employees, or agents, or any of their

relatives without clear and conspicuous

disclosures of those relationships. This

provision would apply only when the

business knew or should have known of

the testimonialist’s relationship.

Proposed § 465.5(c) applies to

solicitations of employee and other

insider reviews. It would prohibit under

some circumstances an officer’s or

manager’s solicitation of consumer

reviews from employees, agents, or

relatives that results in reviews that

don’t clearly and conspicuously

disclose the reviewer’s relationship. The

provision is limited to situations when

the person soliciting the review knew or

should have known of the prospective

reviewer’s relationship and: (a) failed to

instruct the prospective reviewer to

disclose clearly and conspicuously that

relationship, (b) knew or should have

known the review appeared without

such a disclosure and failed to take

remedial steps or, (c) encouraged the

prospective reviewer not to make such

a disclosure.

NADA recommended any proposed

rule provision addressing businesses

writing, soliciting, or publishing

reviews by their employees or family

members clarify that a violation ‘‘only

arises when the business, and not

another entity, affirmatively writes,

solicits, and publishes reviews that fail

to provide clear and conspicuous

disclosures of those relationships.’’

217

Proposed § 465.5(c) would apply to

reviews by employees or family

members. Proposed § 465.5(c) is limited

to solicitation by an officer or manager,

and only when the solicitor failed to

advise a disclosure, knew or should

have known that a review appeared

without such a disclosure and failed to

take remedial steps, or encouraged the

prospective reviewer not to make such

a disclosure. The business would not be

liable under the proposed provision for

an unsolicited review, for a review

about which the solicitor reasonably

should not have known, or for a

reviewer who refuses to make a

disclosure. However, proposed

§ 465.5(c) reflects the Commission’s

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Id.

219

Family First Life Cmt. at 9–10.

220

NADA Cmt. at 3–4.

221

Id. at 3.

222

Cf. FTC Statement of Policy Regarding

Comparative Advertising (1979), https://

www.ftc.gov/legal-library/browse/statement-policy-

regarding-comparative-advertising (‘‘Commission

policy in the area of comparative advertising

encourages the naming of, or reference to

competitors, but requires clarity, and, if necessary,

disclosure to avoid deception of the consumer.’’).

223

NADA Cmt. at 3. The NADA also posited that

highlighting five-star reviews from satisfied

customers on a dealer’s websites is a legitimate

practice that should not be prohibited under a

possible rule. Id. at 4. The proposed Rule does not

address such a practice. The Commission notes,

however, that highlighting five-star reviews from

satisfied customers on a dealer’s websites or in its

other advertising could be a deceptive practice

depending on the facts.

belief that businesses should be

prohibited not only from publishing

insider reviews themselves but also

from causing their creation (e.g., when

an officer or manager of the business

solicits employees to post reviews on

third-party review websites and fails to

instruct the employees to disclose their

relationship to the business).

NADA asked the FTC to define the

term ‘‘relative.’’

218

The Commission

believes that the limitation to situations

in which officers or managers know or

should know that they are soliciting a

relative for an endorsement or

testimonial addresses the comment

without the need for a definition.

Family First Life commented that

when an independent contractor agent

writes a review on a workplace-review

platform such as Glassdoor, the

reviewer’s relationship to the company

is obvious and assumed.

219

The

Commission agrees, in reviews on such

platforms, the relationship is readily

apparent and, in effect, already

disclosed. The Commission does not

believe the proposed Rule needs to

specifically address this scenario.

F. Company-Controlled Review Websites

or Entities

Proposed § 465.6 prohibits a business

from representing that a website,

organization, or entity is providing its

independent reviews or opinions about

a category of businesses, products, or

services that includes the business or its

products or services, when the business

controls, owns, or operates that website,

organization, or entity.

G. Review Suppression

Proposed § 465.7 addresses two types

of review suppression. The first type,

addressed in proposed § 465.7(a), would

prohibit anyone from using an

unjustified legal threat or a physical

threat, intimidation, or false accusation

to prevent the creation of a consumer

review or cause the removal of all or

part of a review. In accordance with

proposed § 465.1(l), an ‘‘unjustified

legal threat’’ is defined as a threat to

initiate or file a baseless legal action,

such as an action for defamation that

challenges truthful speech or matters of

opinion.

NADA recommended that any

proposed rule not prohibit what it

characterized as good faith online

reputation management practices, such

as a business: (a) reaching out to

consumers who have posted negative

reviews and attempting to improve their

reviews by addressing their concerns

(including sometimes giving customers

something of value in satisfaction of

their complaints), or (b) responding on

a comment thread to each negative

review, offering an explanation, making

customers whole, and asking any

successfully satisfied customers to

update their previously negative

review.

220

Neither proposed § 465.7(a)

nor any other proposed Rule provision

would prohibit such conduct (assuming

that reviewers are not required to

remove or change their reviews in order

to be made whole).

Proposed § 465.7(b) would prohibit a

business from misrepresenting that the

consumer reviews of one or more of its

products or services displayed on its

website or platform represent most or all

the reviews submitted to the website or

platform if reviews are being suppressed

based upon their ratings or their

negativity. As proposed, the provision

makes clear that the non-publication of

consumer reviews for certain

enumerated reasons is not considered to

be review suppression so long as the

criteria for withholding reviews are

applied to all reviews submitted

without regard to the favorability of the

review. The listed acceptable reasons for

not publishing a review are: (a) that the

review contains: (i) trade secrets or

privileged or confidential commercial or

financial information, (ii) libelous,

harassing, abusive, obscene, vulgar, or

sexually explicit content, (iii) the

personal information or likeness of

another person, (iv) content that is

discriminatory with respect to race,

gender, sexuality, ethnicity, or another

protected class, or (v) content that is

clearly false or misleading; (b) the seller

reasonably believes it is fake; or (c) the

review is wholly unrelated to the

products or services offered by or

available at the website or platform.

These criteria are based upon those

enumerated in the Consumer Review

Fairness Act, 15 U.S.C. 45b(b)(2) and

(3). Moreover, consumers would

reasonably expect and often prefer that

a business exclude reviews meeting

these criteria, so the undisclosed

exclusion of such reviews solely due to

application of those criteria would be

unlikely to mislead or be material to

consumers.

NADA stated that businesses should

be able to ‘‘remove reviews or comments

that are off topic or include false

statements, advertisements,

inappropriate language, or confidential

or personal identification

information.’’

221

As to reviews that are

‘‘off topic,’’ proposed § 465.7(b) would

permit not publishing reviews that are

‘‘wholly unrelated to the products or

services offered.’’ As to reviews that

contain ‘‘false statements,’’ proposed

§ 465.7(b) would permit not publishing

reviews that are ‘‘clearly false or

misleading.’’ It is unclear what the

comment meant by reviews that include

‘‘advertisements.’’ If NADA means that

it is acceptable to delete a review that

mentions a competitor, that is not an

exception provided in proposed

§ 465.7(b).

222

With regard to reviews

that contain ‘‘inappropriate language,’’

proposed § 465.7(b) would permit not

publishing reviews containing

‘‘harassing, abusive, obscene, vulgar, or

sexually explicit content’’ or ‘‘content

that is discriminatory with respect to

race, gender, sexuality, ethnicity, or

another protected class.’’ As to reviews

that contain ‘‘confidential or personal

identification information,’’ proposed

§ 465.7(b) would allow a seller to not

publish a review that contains ‘‘trade

secrets or privileged or confidential

commercial or financial information,’’

or the ‘‘personal information . . . of

another person.’’ NADA also said that

businesses should be able to ‘‘remove

comments or review functions on their

own websites or certain social media

posts.’’

223

The proposed Rule does not

prohibit or address such conduct.

H. Misuse of Fake Indicators of Social

Media Influence

Proposed § 465.8 prohibits the misuse

of indicators of social media influence.

As defined by proposed § 465.1(f), the

term ‘‘indicators of social media

influence’’ refers to any metrics used by

the public to make assessments of an

individual’s or entity’s social media

influence, such as followers, friends,

connections, subscribers, views, plays,

likes, reposts, and comments.

Proposed § 465.8(a) prohibits anyone

from selling fake indicators of social

media influence that can be used by

persons or businesses to misrepresent

their influence for a commercial

purpose. Proposed § 465.8(b) prohibits

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anyone from procuring fake indicators

of social media influence to

misrepresent their influence or

importance for a commercial purpose.

I. Severability

Proposed § 465.9 is a severability

provision. It provides that the

provisions of the proposed Rule are

separate and severable from one

another. If any provision is stayed or

determined to be invalid, the remaining

provisions will continue in effect.

VI. The Rulemaking Process

The Commission can decide to

finalize the proposed Rule if the

rulemaking record, including the public

comments in response to this NPRM,

supports such a conclusion. The

Commission may, either on its own

initiative or in response to a

commenter’s express request, engage in

additional processes, including those

described in 16 CFR 1.12 and 1.13. If the

Commission on its own initiative

decides to conduct an informal hearing,

or if a commenter files an express

request for such a hearing, then a

separate notice will issue under 16 CFR

1.12(a). Any person who would like to

participate by providing an oral

statement at any informal hearing must

make an express request to do so in

response to this NPRM. Based on the

comment record and existing

prohibitions against unfair or deceptive

consumer reviews and testimonials

under Section 5 of the FTC Act, the

Commission does not here identify any

disputed issues of material fact

necessary to be resolved at an informal

hearing. The Commission may still do

so later, on its own initiative or in

response to a commenter.

VII. Preliminary Regulatory Analysis

Under Section 22 of the FTC Act, the

Commission, when it publishes any

NPRM for a rule as defined in Section

22(a)(1), must include a ‘‘preliminary

regulatory analysis.’’ 15 U.S.C. 57b–

3(b)(1). The required contents of a

preliminary regulatory analysis are (a)

‘‘a concise statement of the need for,

and the objectives of, the proposed

rule,’’ (b) ‘‘a description of any

reasonable alternatives to the proposed

rule which may accomplish the stated

objective,’’ and (c) ‘‘a preliminary

analysis of the projected benefits and

any adverse economic effects and any

other effects’’ for the proposed rule and

each alternative, along with an analysis

‘‘of the effectiveness of the proposed

rule and each alternative in meeting the

stated objectives of the proposed rule.’’

15 U.S.C. 57b–3(b)(1)(A)–(C). This

NPRM already provided the concise

statement of the need for, and the

objectives of, the proposed Rule in

Section IV above. It addresses the other

requirements below.

A. Anticipated Costs and Benefits and

Reasonable Alternatives

The Commission is proposing a rule

to curb certain unfair or deceptive uses

of reviews and testimonials. The

proposed Rule contains several

provisions to promote accuracy in

consumer reviews (henceforth

‘‘reviews’’) and, thus, will help the vast

majority of American consumers who

rely on such reviews to make better-

informed purchase decisions. The

proposed Rule prohibits: the creation,

purchasing, procurement, or

dissemination of fake or false reviews;

repurposing of reviews for substantially

different products; and buying of

reviews in exchange for, or conditioned

on, positive or negative sentiments. It

also includes prohibitions on fake or

false consumer or celebrity testimonials,

insider reviews, misleading company-

controlled review websites or entities,

certain review suppression practices,

and the misuse of indicators of fake

social media influence.

The Commission believes that the

benefits of proceeding with the

rulemaking will significantly outweigh

the costs, but it welcomes public

comment and data (both qualitative and

quantitative) on any benefits and costs

to inform a final regulatory analysis.

In the preliminary analysis below, the

NPRM describes the anticipated impacts

of the proposed Rule. Where possible, it

quantifies the benefits and costs. If a

benefit or cost is quantified, it indicates

the sources of the data relied upon. If an

assumption is needed, the text makes

clear which quantities are being

assumed. The NPRM measures the

benefits and costs of the proposed Rule

against a baseline in which no rule

regarding consumer reviews has been

promulgated by the Commission. The

Commission solicits comments from the

public to improve these estimates before

the promulgation of any final rule.

The estimates in this preliminary

analysis attempt to include a broad set

of economic actors, using data on the

number of entities registered as

businesses in the United States, data on

retail sales, and data on U.S. consumers

who shop online. The Commission

invites submission of information

pertaining to additional economic actors

who would be affected by the proposed

Rule. Conversely, the Commission

solicits information on whether a more

limited set of economic actors would

yield improved estimates.

Quantifiable benefits stem from

consumer welfare improvements and

consumer time savings. With the

proposed Rule, online reviews will be

more accurate overall, leading

consumers to purchase higher-quality

products or products that are better-

matched to their preferences. The

proposed Rule will also lead to more

trustworthy aggregate review ratings

(e.g., star ratings), leading some

consumers to spend less time

scrutinizing reviews to determine their

validity. Quantifiable costs primarily

reflect the resources spent by businesses

to review the proposed Rule and to take

any preemptive or remedial steps to

comply with its provisions. Because the

proposed Rule is an application of

preexisting law under Section 5 of the

FTC Act, the Commission expects these

compliance costs to be minimal.

A period of 10 years is used in the

baseline scenario because FTC rules are

subject to review every 10 years.

Quantifiable aggregate benefits and costs

are summarized as the net present value

over this 10-year period in Table 1.1.

The discount rate reflects society’s

preference for receiving benefits earlier

rather than later; a higher discount rate

is associated with a greater preference

for benefits in the present. The present

value is obtained by multiplying each

year’s net benefit by the discount rate

raised to the power of the number of

years in the future the net benefit

accrues.

T

ABLE

1.1—P

RESENT

V

ALUE OF

N

ET

B

ENEFITS

, 2023–2033

[In billions]

Present value:

low-end

estimate

Present value:

high-end

estimate

Total Benefits:

3% Discount Rate ................................................................................................................................. $59.31 $234.28

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224

See, e.g., Dina Mayzlin, ‘‘Promotional Chat on

the Internet,’’ 25(2) Mktg. Sci., 155–63 (2006).

225

15 U.S.C. 57b(a)(2). Depending on the

egregiousness of the misconduct and the harm it is

causing, the Commission also may seek preliminary

injunctive relief in Federal court. 15 U.S.C. 53(b).

226

See, e.g., Press Release, Fed. Trade Comm’n,

Marketers of Ab Force Weight Loss Device Agree to

Pay $7 Million for Consumer Redress (Jan. 14,

2009), https://www.ftc.gov/news-events/news/press-

releases/2009/01/marketers-ab-force-weight-loss-

device-agree-pay-7-million-consumer-redress

(describing a 2009 settlement of a follow-on Section

19 action against Telebrands Corp. that was brought

after litigation of a 2003 administrative complaint

alleging violations of Section 5 concluded—in this

case, the Section 19 action settled instead of being

litigated to judgment, which would have taken

more time).

T

ABLE

1.1—P

RESENT

V

ALUE OF

N

ET

B

ENEFITS

, 2023–2033—Continued

[In billions]

Present value:

low-end

estimate

Present value:

high-end

estimate

7% Discount Rate ................................................................................................................................. 50.16 200.26

Total One-Time Costs ................................................................................................................... 0.83 0.00

Net Benefits

3% Discount Rate ................................................................................................................................. 58.48 234.28

7% Discount Rate ................................................................................................................................. 49.33 200.26

1. Estimated Benefits of the Proposed

Rule

This section describes the beneficial

impacts of the proposed Rule, provides

preliminary quantitative estimates

where possible, and describes benefits

that are only assessed qualitatively. The

quantifiable estimates reflect benefits

stemming from the decrease in online

review manipulation on third-party

platforms or company websites, which

covers most of the prohibitions

contained in the proposed Rule. This

analysis does not calculate benefits from

the other aspects of the proposed Rule—

prohibitions on fake or false celebrity

testimonials; prohibitions on company-

controlled entities that purportedly

provide independent opinions;

prohibitions on unjustified legal threats

or physical threats, intimidation, or

false accusations in an attempt to

suppress negative consumer reviews;

and prohibitions on the misuse of

indicators of fake social media

influence—because of the limited

quantitative research in these areas. The

Commission invites comment on

research concerning these other aspects

of the proposed Rule. The quantified

benefits are presented by benefit

category, rather than stemming from a

specific provision in the proposed Rule,

because the relevant provisions have the

same end goal—that is, to improve the

information available to consumers by

reducing the level of review

manipulation. Therefore, it is difficult to

disentangle the benefits stemming from

each provision.

Existing academic literature in

economics, marketing, computer

science, and other fields documents the

importance of online reviews: the

number of online reviews and aggregate

ratings are extremely important for

consumer purchase decisions. It is

widely documented that the presence of

online reviews improves consumer

welfare via reductions in both search

costs and the level of information

asymmetry that exists prior to

purchase.

224

When making purchase decisions,

consumers typically have incomplete

information on product quality and

attributes. Searching for additional

information is costly. Consumers incur

costs—including time and effort costs—

to seek, evaluate, and integrate

incoming information. Online platforms

where past users share information

about their experiences can significantly

lower search costs.

Researchers have also demonstrated

consumer reviews create value for

consumers beyond a reduction in search

costs. Consumers are better able to learn

of a product’s quality and attributes

when there is free-flowing, non-

manipulated commentary from past

consumers. Consumer reviews lead to

‘‘better’’ decisions by increasing the

level of information available prior to

purchase and reducing uncertainty. By

the same token, the academic literature

also documents that manipulated or

fake reviews lead to reductions in

consumer welfare by leading consumers

to buy low-quality products or

otherwise make suboptimal purchase

decisions.

A secondary benefit is deterrence of

the specified review and testimonial

practices. The proposed Rule is

essentially the only means for imposing

civil penalties in most cases involving

such practices. Civil penalties are not

generally available under the FTC Act

for this conduct, unless parties are

already subject to a relevant

Commission order or have been served

with a copy of a relevant Notice of

Penalty Offenses. Also, as noted above,

in many cases involving this conduct,

calculating redress or other Section 19

relief may be difficult. Without civil

penalties, bad actors have little fear of

being penalized for using fraud and

deception in connection with reviews

and endorsements.

To obtain redress without alleging a

rule violation, the Commission must

successfully conclude an administrative

proceeding including any appeal and

file a follow-on Federal case under

Section 19 to establish that the conduct

is ‘‘one which a reasonable man would

have known under the circumstances

was dishonest or fraudulent.’’

225

Although the Commission is likely to

meet this standard in cases involving

the conduct covered by the proposed

Rule, it would take substantially more

time and resources, and would

significantly delay any redress to

victims, compared to a case under the

proposed Rule violation, which does not

require multiple proceedings or a

special knowledge requirement.

226

Given the prevalence of unfair or

deceptive conduct involving reviews

and testimonials, the Commission will

have no shortage of bad actors to

investigate; it could invest the extra

resources freed up by any final rule into

more investigations and actions with

respect to consumer reviews or

testimonials. In sum, the potential

consumer-redress benefits of the

proposed Rule are significant: the

Commission could put a stop to more

inarguably unfair or deceptive consumer

reviews or testimonials, return money to

more victims, and obtain that redress

more quickly.

a. Consumer Welfare Benefits From

Better-Informed Purchase Decisions

The study containing the most direct

estimate of welfare losses from review

manipulation finds that the presence of

fake reviews leads consumers to lose

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227

See Akesson et al., ‘‘The Impact of Fake

Reviews on Demand and Welfare,’’ supra note 158.

228

See U.S. Census Bureau, ‘‘Quarterly E-

Commerce Sales Report,’’ Feb. 17, 2023, https://

www.census.gov/retail/ecommerce.html.

229

U.S. Census Bureau, ‘‘Service Annual

Survey,’’ Nov. 22, 2022, https://www.census.gov/

programs-surveys/sas.html (listing total revenue of

$843,605,000,000 for NAICS Code 722 in 2021, the

most recent year with data).

230

See Michael Luca, ‘‘Reviews, Reputation, and

Revenue: The Case of Yelp.com.’’ Harvard Bus. Sch.

Working Paper 12–016 (2016).

231

25 percent is likely to be a reasonable estimate

based on the difference in revenues for new

restaurants and established restaurants. A study

conducted by Toast, Inc. found that new restaurants

earn approximately $112,000 in average revenue

per year (https://pos.toasttab.com/blog/on-the-line/

average-restaurant-revenue). This is approximately

25 percent of average revenue for restaurants overall

($486,000, according to the website Eat Pallet,

https://eatpallet.com/how-much-do-restaurants-

make-in-a-day).

232

See U.S. Census Bureau, ‘‘Service Annual

Survey,’’ supra note 229 (listing total 2021 revenue

of $247,246,000,000 for NAICS Code 721 and listing

total 2021 revenue of $56,845,000,000 for NAICS

Codes 812111 through 812199 and NAICS Code

81291).

233

See Linchi Kwok, ‘‘Will business travel

spending return to the pre-pandemic level soon?’’

Hospitality Net, Sept. 22, 2022, https://

www.hospitalitynet.org/opinion/4112075.html.

234

These estimates range from the single digits to

over 20 percent. See Tripadvisor, ‘‘2023 Review

Transparency Report,’’ https://

www.tripadvisor.com/TransparencyReport2023

(finding that 4.4% of review submissions were

fraudulent); Trustpilot, ‘‘Transparency Report

2022,’’ https://cdn.trustpilot.net/trustsite-

consumersite/trustpilot-transparency-report-

2022.pdf (stating that its software removed 5.8

percent of reviews due to being fake); Yelp, ‘‘2022

Yelp Trust & Safety Report,’’ https://trust.yelp.com/

trust-and-safety-report (stating that 19 percent of

submitted reviews were marked as ‘‘not

recommended’’ by Yelp’s software); Devesh Raval,

‘‘Do Gatekeepers Develop Worse Products?

Evidence from Online Review Platforms,’’ Working

Paper, Feb. 27, 2023, https://deveshraval.github.io/

reviews.pdf (finding that the share of hidden (likely

fake) Yelp reviews is as high as 47 percent).

235

See Nan Hu et al., ‘‘Manipulation of online

reviews: An analysis of ratings, readability, and

sentiments,’’ 52(3) Decision Support Systems 674–

84 (Feb. 2012) (finding that 10.3 percent of books

sold on Amazon had manipulated reviews); Luca

and Zervas, ‘‘Fake It Till You Make It: Reputation,

Competition, and Yelp Review Fraud,’’ supra note

158 (finding that 10 percent of Boston, MA

restaurants had filtered 5-star reviews on Yelp)

(Table 3, row 4); Raval, ‘‘Do Gatekeepers Develop

Worse Products? Evidence from Online Review

Platforms,’’ supra note 234 (finding that 9.7 percent

of businesses with reviews or complaints with the

Better Business Bureau are of low quality, where

fake reviews inflate ratings) (Table III, column 3,

row 1).

236

See He et al., ‘‘The Market for Fake Reviews,’’

supra note 158; Dina Mayzlin et al., ‘‘Promotional

Reviews: An Empirical Investigation of Online

Review Manipulation,’’ 104(8) The Am. Econ. Rev.

2421–55 (2014).

$0.12 for every dollar spent in an

experimental setting.

227

Due to limited

quantitative estimates in the literature,

the NPRM assumes this measure of

welfare loss encompasses the various

types of review manipulation covered

by the proposed Rule. It also assumes

the proposed Rule causes all fake or

manipulated reviews to vanish. Thus,

consumers will gain an estimated $0.12

for every dollar spent on goods whose

online reviews included fake ones.

To estimate consumer welfare benefits

from better-informed purchase

decisions, the NPRM first estimates the

total amount of sales for which

consumers consult online reviews. U.S.

e-commerce sales totaled $1.034 trillion

in 2022.

228

The NPRM assumes all

products sold online had some form of

user-generated commentary (e.g., on

third-party review platforms, on

discussion boards, on company

websites, or on social media), and that

this commentary factors into consumers’

purchase decisions for these goods.

Online reviews are also important for

commerce not conducted online,

including for revenues earned by the

hospitality industry and by other

services. Sales for businesses classified

as ‘‘Food Services and Drinking Places’’

by the U.S. Census totaled $843.61

billion in 2021, which includes revenue

from restaurants and bars.

229

The NPRM

assumes consumers rely on reviews for

only a portion of these sales. Some

consumers—particularly those living in

rural parts of the country and in smaller

cities—may have a small set of familiar

food and drink establishments available

to them, making online reviews less

influential to their decision to patronize

a particular one. Moreover, prior

research has found online reviews do

not impact revenues of chain

restaurants.

230

Accordingly, the NPRM

assumes consumers rely on reviews for

25 percent of the total revenue

generated in the food services and

drinking places sector (25 percent of

$843.61 billion, or $210.90 billion).

231

Online reviews are also important for

sales in other service sectors. In 2021,

total revenue was $247.25 billion for the

accommodations sector (which includes

hotels and vacation rentals), and total

revenue was $56.85 billion for personal

services (including beauty salons, barber

shops, health clubs, and non-veterinary

pet care), totaling $304.10 billion for

both sectors.

232

About half of hotel

revenue is generated by business

travelers, who are likely to rely less on

online reviews than leisure travelers

do.

233

In addition, pre-paid hotel

bookings and vacation rentals booked

online are already accounted for in the

e-commerce sales figure described

above. Furthermore, some consumers

may be loyal customers of local salons

and other personal services, regardless

of these businesses’ online reputations.

Because of these reasons, the NPRM

assumes that a subset of accommodation

and personal services revenues is

affected by consumer reviews. Similar

to the calculation for the food and

drinking places industry, the NPRM

assumes 25 percent of total

accommodation and personal care

services revenue is impacted by

consumer reviews (25 percent of

$304.10 billion, or $76.03 billion). The

total estimated revenue for services

impacted by consumer reviews is

$286.93 billion (the sum of $210.90

billion and $76.03 billion). The

Commission seeks comments to

improve this estimate.

Combining the revenue estimates

described above yields $1.321 trillion in

estimated sales of goods or services for

which consumers incorporate reviews

into their decision-making. In this

analysis, the NPRM does not

incorporate revenues stemming from the

physical sale of goods in retail stores

where consumers read online reviews

before purchasing items in person. The

Commission invites commenters to

submit information to quantify non-e-

commerce retail sales that are impacted

by reviews.

Quantitative estimates of the

incidence of fake or false reviews vary

by source.

234

Nevertheless, at least three

prior studies examining the degree of

review manipulation as a proportion of

businesses or products (rather than as a

proportion of reviews) contain similar

findings: according to these studies,

approximately 10 percent of products or

businesses have some manipulated

consumer reviews.

235

Thus, a basic

approximation of total e-commerce sales

involving some review manipulation is

10 percent of $1.034 trillion, or $103.4

billion. Similarly, a basic approximation

of review-dependent service industry

sales involving some review

manipulation is 10 percent of $286.93

billion, or $28.69 billion. The

Commission seeks submissions of

additional research on the prevalence of

review manipulation to improve this

estimate.

Importantly, online businesses that

engage in review manipulation are

likely to earn less revenue than other e-

commerce companies. For example,

prior research has found independent

firms and sellers offering lower-quality

products are more likely to engage in

review manipulation.

236

Therefore, e-

commerce sales affected by review

manipulation are likely to be lower than

the $103.4 billion in sales described

above. A more conservative estimate of

e-commerce sales involving review

manipulation can be obtained by using

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237

See Davide Proserpio et al., ‘‘How Fake

Customer Reviews Do—and Don’t—Work,’’ Harvard

Bus. Rev., Nov. 24, 2020, https://hbr.org/2020/11/

how-fake-customer-reviews-do-and-dont-work. The

authors find that products sold on Amazon with

manipulated reviews are typically in the $15 to $40

price range. The midpoint of this range ($27.50)

represents 19 percent of the average product’s price

($142.74, according to a study conducted by

Semrush Inc., https://www.semrush.com/blog/

amazon-pricing-study).

238

E-commerce sales increased by 7.7 percent

from 2021 to 2022. See U.S. Census Bureau,

‘‘Quarterly E-Commerce Sales Report,’’ supra note

228. Using growth in the past year to predict future

e-commerce sales results in a more conservative

estimate than using a longer time frame. E-

commerce sales experienced higher annual growth

rates prior to 2021 (14 percent from 2018 to 2019,

43 percent from 2019 to 2020, and 14 percent from

2020 to 2021). The NPRM does not project revenues

for non-e-commerce industries because the two

most recent years of data are from 2021 and 2020;

linear trends during these years are unique to the

pandemic and are unlikely to be accurate for future

years.

239

See Pew Research Center, ‘‘Online Shopping

and E-Commerce,’’ Dec. 19, 2016, https://

www.pewresearch.org/internet/2016/12/19/online-

shopping-and-e-commerce.

240

See Int’l Post Corp., ‘‘Cross-Border E-

Commerce Shopper Survey 2022,’’ Jan. 2023,

https://www.ipc.be/-/media/documents/public/

publications/ipc-shoppers-survey/

onlineshoppersurvey2022.pdf.

241

See BrightLocal, ‘‘Local Consumer Review

Survey 2019,’’ Dec. 11, 2019, https://

www.brightlocal.com/research/local-consumer-

review-survey-2019.

242

Bureau of Labor Statistics, ‘‘May 2021

National Occupational and Wage Estimates, Unites

States,’’ https://www.bls.gov/oes/current/oes_

nat.htm (listing mean hourly wage of $28.01 for all

occupations).

243

See Daniel S. Hamermesh, ‘‘What’s to Know

About Time Use?,’’ 30 J. of Econ. Survs. 198–203

(2016), https://doi.org/10.1111/joes.12107.

price differentials of review-

manipulated products versus others.

Because products with online review

manipulation have price points

approximately 19 percent of the average

price of goods sold online (according to

research using data from Amazon),

237

a

more conservative estimate of review-

manipulated products’ revenue is 1.9

percent (19 percent × 10 percent) of all

$1.034 trillion in e-commerce sales, or

$19.65 billion. Because the Commission

does not have data on the revenue or

quantities sold of review-manipulated

products, the NPRM assumes revenue is

constant across price points and rely

solely on the price differential to

approximate revenue. The NPRM does

not similarly adjust revenues for non-e-

commerce firms (e.g., restaurant and

hotels) because there is less variation in

prices in those industries. The

Commission invites commenters to

submit information to improve this

estimate.

The NPRM estimates annual welfare

gains by applying the $0.12 estimate,

described above, to the estimated

amount of U.S. sales likely to have some

manipulated consumer reviews,

yielding an annual estimate of welfare

gains in the range of $5.80 billion (12

percent of $48.34 billion, the sum of

$19.65 billion and $28.69 billion) and

$15.85 billion (12 percent of $132.09

billion, the sum of $103.4 billion and

$28.69 billion). Assuming e-commerce

sales increase linearly over the next ten

years at the same rate as they did in the

past year,

238

the present value of

consumer welfare improvements from

better-informed purchasing decisions is

estimated to be between $50.16 and

$199.40 billion as described in Table

2.1.

T

ABLE

2.1—E

STIMATED

B

ENEFITS

F

ROM

C

ONSUMER

W

ELFARE

I

MPROVEMENTS

F

ROM

P

URCHASE

D

ECISIONS

Percent of e-commerce revenue impacted by review manipulation

Total annual

welfare

improvements

from better-

informed

purchase

decisions

(in billions)

Total 10-year

(2023–2033)

welfare

improvement,

3% discount rate

(in billions)

Total 10-year

(2023–2033)

welfare

improvement,

7% discount rate

(in billions)

10 ............................................................................................................................... $15.85 $199.40 $170.43

1.9 .............................................................................................................................. 5.80 59.31 50.16

b. Consumer Time Savings From

Increased Reliability of Summary

Ratings

The proposed Rule’s prohibitions

against deceptive and unfair consumer

review practices would increase the

reliability of consumer reviews. The

NPRM assumes this improvement in the

dependability of reviews will lead

consumers to place more trust in

aggregate measures (e.g., aggregate star

ratings), which many review settings

use to summarize consumer reviews.

This in turn will lead some consumers

to spend less time scrutinizing

individual reviews to detect red flags

commonly found in manipulated

reviews (e.g., spelling and grammar

mistakes, generic highly positive or

negative statements, and lack of detail).

Therefore, the proposed Rule is likely to

result in some amount of time savings

for consumers who consult online

reviews before making purchases.

Approximately 80 percent of

Americans are online shoppers.

239

Of

those who shop online, 14 percent shop

online more than once a week, 20

percent shop online once a week, 23

percent shop online once every two

weeks, 25 percent shop online once a

month, and the remainder do so every

few months.

240

Different age groups of

online shoppers spend various amounts

of time reading reviews before making a

purchase decision. On average, younger

consumers spend more time reading

reviews than older consumers.

241

This

analysis does not incorporate time spent

by consumers researching reviews of

restaurants, hotels, and other goods and

services that are not purchased online

because of the limited amount of

information available regarding

consumers’ total time spent on such

activities. The Commission invites

commenters to submit information

related to the time consumers spend

reading reviews for goods and services

not purchased online.

According to the Bureau of Labor

Statistics, the average hourly wage in

2021 was $28.01.

242

Recent research

suggests individuals living in the United

States value their non-work time at 82

percent of average hourly earnings.

243

Thus, Americans overall value their

non-work time at $22.97 per hour on

average. The Commission invites

comment on this methodology and

seeks submissions of additional data

related to quantifying Americans’ value

of time.

The survey data does not specify

whether consumers were surveyed

regarding the time spent reading

reviews before the purchase of a single

product or whether the question

concerned the purchase of multiple

products. This analysis assumes the

time listed in the survey results pertains

to the purchase of a single product. It

also assumes the implementation of the

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244

See Luca, ‘‘Reviews, Reputation, and Revenue:

The Case of Yelp.com,’’ supra note 230 (finding that

chain restaurants have declined in market share as

Yelp penetration has increased); Gregory Lewis and

Georgios Zervas, ‘‘The Welfare Impact of Consumer

Reviews: A Case Study of the Hotel Industry,’’

Working Paper, https://economics.sas.upenn.edu/

sites/default/files/filevault/u475/tawelfare.pdf

(finding that demand for independent hotels is

more sensitive to reviews on Tripadvisor); Brett

Hollenbeck, ‘‘Online Reputation Mechanisms and

the Decreasing Value of Chain Affiliation,’’ 55(5) J.

of Mktg. Resch. 636–54 (2018), https://

www.jstor.org/stable/26966532 (finding that

branded, chain-affiliated hotels’ premiums over

independent hotels have declined substantially

largely due to online reputation mechanisms).

245

See Limin Fang, ‘‘The Effects of Online

Review Platforms on Restaurant Revenue,

Consumer Learning, and Welfare,’’ 68(11) Mgmt.

Sci. 7793–8514 (2022).

246

See Lappas et al., ‘‘The Impact of Fake

Reviews on Online Visibility: A Vulnerability

Assessment of the Hotel Industry,’’ supra note 158.

proposed Rule would reduce the time

spent reading reviews by 10 percent.

Combining the above figures results in

$2.49 billion in consumer time savings

per year, or a present value of $18.55

billion to $21.69 billion over a 10-year

period, as described in Table 2.2. The

Commission invites commenters to

submit information to improve this

estimate.

In addition, there are likely to be

other utility-related benefits consumers

receive when reading nonmanipulated

online reviews or consulting more

accurate aggregate summary measures,

such as increased satisfaction (apart

from purchasing decisions) and

decreased frustration. The Commission

is not able to quantify these benefits and

invites commenters to submit

information to assist with calculating

these additional benefits.

Finally, some consumers may spend

more time reading reviews if reviews are

less likely to be fake or otherwise

manipulated. This increase in time

spent reading reviews may offset any

time savings from the increased

reliability of summary ratings.

Therefore, the NPRM presents another

scenario in Table 2.2 where consumers

do not gain any benefits from time

savings. However, as before, there are

likely to be additional benefits difficult

to quantify (e.g., decreased frustration)

that result from reading more accurate

reviews, likely yielding positive net

benefits related to reading reviews even

when consumers spend more time doing

so. The Commission invites comment

on methods that would allow us to

quantify such benefits.

T

ABLE

2.2—E

STIMATED

B

ENEFITS

F

ROM

T

IME

S

AVINGS

Scenario 1—Improved Reliability of Aggregate Measures Reduces Overall Time Spent Reading Reviews:

Number of online shoppers, age 18–34

a

.............................................................................................................................. 60,467,204

Average amount of time spent reading online reviews before making a purchase decision (in hours), age 18–34 ............ 0.336

Number of online shoppers, age 35–54

a

.............................................................................................................................. 67,273,832

Average amount of time spent reading online reviews before making a purchase decision (in hours), age 35–54 ............ 0.231

Number of online shoppers, age 55+

a

.................................................................................................................................. 78,920,814

Average amount of time spent reading online reviews before making a purchase decision (in hours), age 55+ ................ 0.167

Total amount of time all online shoppers spend reading online reviews before making a purchase decision (in

hours) ........................................................................................................................................................................... 48,991,116

Total amount of time U.S. online shoppers spend reading online reviews per year (in hours)

b

.................................. 1,728,406,578

Value of time for online shoppers (per hour) .................................................................................................................. $22.97

Percentage of time saved ............................................................................................................................................... 10%

Total annual time savings ........................................................................................................................................ $3,970,149,909

Total 10-year (2023–2033) time savings, 3% discount rate (in billions) ....................................................................................... $34.88

Total 10-year (2023–2033) time savings, 7% discount rate (in billions) ....................................................................................... $29.84

Scenario 2—Increase in Time Spent Reading Reviews Offsets Time Savings from Improved Reliability of Summary Meas-

ures:

No quantifiable benefit ............................................................................................................................................................ $0

a

80% of age-specific total U.S. population (Source: Pew Research Center, U.S. Census).

b

Adjusting for online shopping frequency (Source: International Post Corporation).

c. Benefits Related to Competition

Accurate online reviews have been

shown to improve competition. Several

studies have found online reviews are

particularly important for independent

and newer firms.

244

Ratings are more

influential for these firms because

consumers do not have strong prior

beliefs as to their quality. New entrants

whose sales benefit from online reviews

typically offer higher quality goods and

services. On the other hand, lower-

quality firms often experience revenue

losses with more online review

activity.

245

Relatedly, fake online reviews allow

companies to surpass competitors. One

study found it only takes 50 fake

reviews for a seller to pass any of its

competitors in terms of visibility (e.g.,

via rankings or search results).

246

It

follows that by curbing the number of

fake or manipulated reviews, the

proposed Rule would benefit consumers

by improving the competitive

environment for legitimate firms selling

higher-quality products (i.e., those who

do not rely on review manipulation to

sell their goods). The benefits resulting

from improvements in the competitive

environment are difficult to quantify.

The Commission invites comment on

the best approach to quantifying such

benefits.

2. Estimated Costs of the Proposed Rule

This section describes the costs

associated with the proposed Rule,

provides preliminary quantitative

estimates where possible, and describes

costs that are only assessed

qualitatively.

a. Compliance Costs

The acts and practices prohibited by

the proposed Rule are unfair or

deceptive under Section 5 of the FTC

Act. The proposed Rule targets acts or

practices that are clear violations of

Section 5, and businesses that are

compliant will continue to be

compliant. Moreover, the FTC routinely

provides guidance to businesses on

complying with FTC law, which will

make the implications of the proposed

Rule easy to understand for a wide

range of businesses. Accordingly, the

NPRM presents one scenario in Table

3.1 where businesses spend a de

minimis amount of time interpreting the

proposed Rule and make no changes to

their current policies.

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247

See U.S. Census Bureau, ‘‘2019 SUSB Annual

Data Tables by Establishment Industry,’’ https://

www.census.gov/data/tables/2019/econ/susb/2019-

susb-annual.html (listing 6.10 million total firms

with at least one paid employee) and

‘‘Nonemployer Statistics,’’ https://www.census.gov/

programs-surveys/nonemployer-statistics.html

(listing 27.10 million firms with no paid

employees).

248

74 percent of small businesses have at least

one Google review. See BrightLocal, ‘‘Google

Reviews Study,’’ https://www.brightlocal.com/

research/google-reviews-study/.

249

See Bureau of Labor Statistics, Occupational

Outlook Handbook: Lawyers, https://www.bls.gov/

ooh/legal/lawyers.htm.

250

See Payscale, ‘‘Average Small Business Owner

Salary,’’ https://www.payscale.com/research/US/

Job=Small_Business_Owner/Salary.

However, because of the enhanced

penalty associated with violating the

proposed Rule (relative to de novo

violations of Section 5 of the FTC Act),

businesses may choose to incur

additional administrative burdens to

ensure compliance. The NPRM presents

another scenario in Table 3.1 where

businesses notify their employees of the

proposed Rule, conduct a review of

their processes, and take any steps they

deem important to ensure compliance.

For firms that already comply with

Section 5, these steps might be out of

caution so as not to risk the possibility

of violating the proposed Rule. For

example, some sellers may currently

flag and remove reviews on their

websites that they reasonably believe

are fake. While this practice would not

amount to not a violation of the relevant

rule provision (proposed § 465.7(b)),

promulgation of the proposed Rule may

lead some businesses to choose to take

extra steps to verify the inauthenticity of

such reviews before suppressing them.

A business may also decide to notify its

employees of the proposed Rule. For

example, if certain employees are

responsible for posting new product

pages or managing the company’s social

media presence, business owners may

wish to notify these employees to

ensure compliance. Although cautious

firms may elect to conduct additional

compliance review, the proposed Rule

would not require any additional

recordkeeping or notices beyond what is

required by Section 5 of the FTC Act.

For the heightened compliance review

scenario in Table 3.1, the NPRM makes

assumptions about the number of

businesses impacted and the number of

person-hours involved in compliance

activities. In 2019, there were

approximately 33.20 million total firms

in the United States. 20,868 of these

were entities with 500 or more

employees (‘‘large companies’’), and the

remaining 33.19 million had fewer than

500 employees (‘‘small companies’’).

247

The NPRM assumes all 20,868 large

companies had some form of online

consumer review presence (e.g., on

third-party business platforms such as

Yelp or Google Reviews, or on their own

websites). It assumes 74 percent of the

33.19 million small companies (24.56

million companies) had an online

consumer review presence.

248

With heightened compliance review,

the NPRM assumes lawyers at large

companies, whose time is valued at

$61.54 per hour,

249

will spend eight

hours conducting a one-time review of

the proposed Rule and notifying

employees whose role involves creating

new product pages, managing the

company’s social media presence, and

any other relevant practices covered by

the proposed Rule. It assumes small

company owners, whose time is valued

at $33.23,

250

spend one hour doing the

same.

In addition, some companies may

spend time reviewing their automated

processes to ensure they comply with

the proposed Rule. For instance, they

may check any review filtering

processes to ensure reviews that are

flagged and removed meet the

permissible exceptions listed in

proposed § 465.7(b). These costs, which

companies might incur just once or on

a recurring basis, are likely to be

minimal. The NPRM does not quantify

these process-related costs because,

among other things, the Commission

does not know the number of firms that

might undertake such a review. The

Commission invites commenters to

submit information to assist with the

calculation of these costs.

The total estimated costs are tabulated

in Table 3.1. The Commission seeks

comments on the assumptions

incorporated in these estimates.

T

ABLE

3.1—E

STIMATED

C

OMPLIANCE

C

OSTS

2023 Only

Scenario 1—No Review:

No cost ................................................................................................................................................................................... $0

Total cost ......................................................................................................................................................................... $0

Scenario 2—Heightened Compliance Review:

Number of large companies (in thousands) ........................................................................................................................... 20.86

Cost per hour of rule review and related activities ................................................................................................................ $61.54

Number of hours of rule review and related activities ........................................................................................................... 8

Subtotal (in millions) ........................................................................................................................................................ $10.27

Number of small companies with online reviews (in thousands) ........................................................................................... 24,557.31

Cost per hour of rule review and related activities ................................................................................................................ $33.23

Number of hours of rule review and related activities ........................................................................................................... 1

Subtotal (in millions) ........................................................................................................................................................ $816.04

Total cost (in millions) .............................................................................................................................................. $826.31

b. Other Impacts of the Proposed Rule

There are several other potential

effects from the proposed Rule. While

the proposed requirements are far from

onerous, there is the possibility some

sellers may ‘‘overcorrect’’ in response to

the higher penalties imposed by the rule

compared to existing law. For example,

a firm may encounter an excess of fake,

negative reviews from a competitor.

While proposed § 465.7(b) permits the

suppression of reviews the seller

reasonably believes are fake, an

overcautious seller seeking to suppress

fake reviews from competitors may

choose to display no reviews

whatsoever so as not to risk violating

the proposed Rule. Alternatively, such a

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firm may take no action towards

suspected fake reviews to avoid a

possible rule violation. Both of these

hypothetical scenarios would likely hurt

the information environment for

consumers. The Commission believes

such unintended consequences of the

proposed Rule are very unlikely. The

Commission seeks comment on the

likelihood of such effects and

information on how to best quantify

them.

3. Potentially Reasonable Alternatives

One alternative to the proposed Rule

is to terminate the rulemaking and rely

instead on the existing tools the

Commission currently possesses to

combat the specified review and

testimonial practices, such as consumer

education and enforcement actions

brought under Sections 5 and 19 of the

FTC Act. Terminating the rulemaking

would preserve those Commission

resources needed to continue the

rulemaking, but such a short-term

benefit would come at a significant cost.

Failing to strengthen the set of tools

available in support of the

Commission’s enforcement program

against unfair or deceptive consumer

reviews or testimonials would deprive it

of the benefits outlined above. The

Commission seeks comment on this

alternative and any potentially

reasonable alternative to the proposed

Rule.

VIII. Paperwork Reduction Act

In addition to the requirements of

Section 22, the Commission must

provide in any NPRM the ‘‘information

required by the Regulatory Flexibility

Act, 5 U.S.C. 601–612, and the

Paperwork Reduction Act, 44 U.S.C.

3501–3520, if applicable.’’ 16 CFR

1.11(c)(4).

The Paperwork Reduction Act

requires the Commission to engage in

additional processes and analysis if it

proposes to engage in a ‘‘collection of

information’’ as part of the proposed

Rule. 44 U.S.C. 3506. The Commission

states that the proposed Rule contains

no collection of information.

IX. Regulatory Flexibility Act—Initial

Regulatory Flexibility Analysis

The Regulatory Flexibility Act

(‘‘RFA’’), 5 U.S.C. 601 et seq., requires

an agency to provide an Initial

Regulatory Flexibility Analysis

(‘‘IRFA’’) with a proposed rule and a

Final Regulatory Flexibility Analysis

(‘‘FRFA’’) with a final rule, if any,

unless the Commission certifies the

proposed rule will not have a significant

economic impact on a substantial

number of small entities. 5 U.S.C. 605.

The purpose of a regulatory flexibility

analysis is to ensure an agency

considers potential impacts on small

entities and examines regulatory

alternatives that could achieve the

regulatory purpose while minimizing

burdens on small entities.

The Commission believes the

proposed Rule would not have a

significant economic impact upon small

entities, although it may affect a

substantial number of small businesses.

The proposed Rule primarily prohibits

certain unfair or deceptive acts or

practices involving consumer reviews or

testimonials and does not impose a

recordkeeping or disclosure requirement

upon businesses. In addition, the

Commission does not anticipate these

changes will add significant additional

costs to small businesses. Specifically,

as discussed in further detail below, the

Commission anticipates than an average

small business will spend, at most, one

hour on compliance review, incurring a

cost of $33.23. Therefore, the NPRM

imposes no new significant burdens on

law-abiding businesses.

Accordingly, based on available

information, the Commission certifies

the proposed Rule will not have a

significant economic impact on a

substantial number of small entities.

Although the Commission certifies

under the RFA that the proposed rule

would not, if promulgated, have a

significant impact on a substantial

number of small entities, the

Commission has determined,

nonetheless, it is appropriate to publish

an IRFA to inquire into the impact of

the proposed Rule on small entities.

Therefore, the Commission has prepared

the following analysis:

A. Description of the Reasons Agency

Action Is Being Considered

The Commission describes the

reasons for the proposed Rule in Section

IV above. The FTC’s law enforcement,

outreach, and other engagement in this

area indicate certain unfair or deceptive

acts or practices involving consumer

reviews or testimonials are prevalent.

The proposed Rule would benefit

consumers and legitimate businesses

without imposing significant burdens.

B. Statement of the Objectives of, and

Legal Basis for, the Proposed Rule

The Commission describes the

objectives for the proposed rule in

Section IV above. The legal basis for the

proposed rule is Section 18 of the FTC

Act, 15 U.S.C. 57a, which authorizes the

Commission to promulgate, modify, and

repeal trade regulation rules that define

with specificity acts or practices in or

affecting commerce that are unfair or

deceptive within the meaning of Section

5(a)(1) of the FTC Act, 15 U.S.C.

45(a)(1).

C. Description and Estimate of the

Number of Small Entities to Which the

Proposed Rule Will Apply

The proposed Rule would impact all

small entities that currently have, or

might potentially accrue, consumer

reviews or testimonials. It would also

impact small entities that use celebrity

testimonials or have a social media

presence. It is likely the proposed rule

would primarily affect businesses that

sell products or services directly to

consumers. For example, the proposed

Rule is less likely to impact small

entities that manufacture niche raw

materials for other businesses or small

agricultural firms that do not sell

directly to consumers. Nevertheless, for

a conservative estimate of total costs,

the NPRM assumes the proposed Rule

would impact all industry classes of

small entities.

As described in Part V.A.2.a., there

are approximately 33.19 million small

businesses in the United States. Prior

research has found 74 percent of small

businesses have at least one Google

review. It is possible that, across all

platforms (beyond Google reviews), a

higher percentage of small businesses

have consumer reviews or testimonials,

celebrity testimonials, or a social media

presence. The Commission does not

have the appropriate data to refine this

estimate. Therefore, the best estimate is

24.56 million (74 percent × 33.19

million) small businesses would be

impacted by the proposed Rule. The

Commission seeks comment on the

estimated number of small business

entities for which the proposed Rule

would have a significant economic

impact.

D. Description of the Projected

Reporting, Recordkeeping, and Other

Compliance Requirements

The proposed contains no reporting or

recordkeeping requirements. Therefore,

many legitimate businesses are likely to

incur no additional compliance costs

with the proposed Rule.

As described in Section V.A.2.a, a

cautious firm may elect to undertake

additional compliance review due to the

enhanced penalties associated with

potential rule violations (relative to de

novo violations of Section 5 of the FTC

Act). If every small business impacted

by the proposed Rule conducted one

hour of compliance review, each firm

would incur $33.23 of compliance costs,

which reflects the estimated hourly

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251

See Payscale, ‘‘Average Small Business Owner

Salary,’’ supra note 250.

earnings of a small business owner.

251

Therefore, under the conservative

assumption of heightened compliance

review for all small businesses, costs to

small businesses would total $816.13

million (24.56 million × $33.23).

Because it is likely only a minority of

small businesses would elect to conduct

optional compliance review, total

compliance costs for these entities are

likely to be significantly lower than this

estimate.

E. Identification of Duplicative,

Overlapping, or Conflicting Federal

Rules

The Commission has not identified

any duplication, overlap, or conflict

with the proposed Rule. The

Commission invites comment and

information on this issue.

F. Description of Any Significant

Alternatives to the Proposed Rule

The Commission describes

alternatives in Section V.A.3. One

alternative to the proposed Rule is to

rely on the existing tools the

Commission currently possesses to

combat the specified review and

testimonial practices, such as consumer

education and enforcement actions

brought under Sections 5 and 19 of the

FTC Act. The Commission believes

promulgation of the proposed Rule

would result in greater net benefits to

the marketplace while imposing no

additional burdens beyond what is

required by the FTC Act. As described

in further detail in Section V.A., the

proposed Rule would not only result in

significant benefits to consumers but

also improve the competitive

environment, particularly for small,

independent, or new firms. Therefore,

the proposed Rule appears to be

superior to this alternative for small

entities.

The Commission seeks comment on

alternative compliance methods that

would reduce the economic impact of

the proposed Rule on small entities.

X. Request for Comments

Members of the public are invited to

comment on any issues or concerns they

believe are relevant or appropriate to the

Commission’s consideration of the

proposed Rule. The Commission

requests that factual data on which the

comments are based be submitted with

the comments. In addition to the issues

raised above, the Commission solicits

public comment on the specific

questions identified below. Responses

to these questions should be itemized

according to the numbered questions in

this document. These questions are

designed to assist the public and should

not be construed as a limitation on the

issues on which public comment may

be submitted.

General Questions for Comment

When responding to any of the

following general questions, please

specify the portion(s) of the proposal to

which your comment relates.

1. Does the proposed Rule further the

Commission’s goal of protecting

consumers from clearly unfair or

deceptive acts or practices involving

consumer reviews and testimonials?

Why or why not?

2. Should the Commission finalize the

proposed Rule as a final rule? Why or

why not? How, if at all, should the

Commission change the proposed Rule

in promulgating a final rule?

3. Please provide comment, including

relevant data, statistics, consumer

complaint information, or any other

evidence, on each different provision of

the proposed Rule. Regarding each

provision, please include answers to the

following questions:

a. What would the provision’s impact

(including any benefits and costs), if

any, be on consumers, governments, and

businesses, including existing

businesses and those yet to be started?

Are there changes that could be made to

lessen any such burdens without

significantly reducing the benefits?

b. Is the proposed prohibition in the

provision clear, meaningful, and

appropriate?

c. Should the scope of the proposed

prohibition be expanded or narrowed,

and, if so, how, and why? How, if at all,

should it be improved?

d. Should any final rule keep the

proposed prohibition and, if so, why? If

not, what alternative proposals should

the Commission consider?

4. Does the proposed Rule contain a

collection of information?

5. Would the proposed Rule, if

promulgated, have a significant

economic impact on a substantial

number of small entities? If so, how

could it be modified to avoid a

significant economic impact on a

substantial number of small entities?

Specific Questions for Comment

§ 465.1 Definitions

6. Are the proposed definitions clear?

Should changes be made to any

definitions? Should the scope of any of

the proposed definitions be expanded or

narrowed, and if so, why?

7. What additional definitions, if any,

are needed?

§ 465.2 Fake or False Consumer

Reviews, Consumer Testimonials, or

Celebrity Testimonials

Proposed § 465.2(b) would prohibit

businesses from purchasing a consumer

review, or from disseminating or

causing the dissemination of a

consumer testimonial or celebrity

testimonial when the business knew or

should have known it was false or fake.

Proposed § 465.2(c) would prohibit

businesses from procuring a consumer

review for posting on a third-party

platform or website that the business

knew or should have known was false

or fake.

8. Is the ‘‘knew or should have

known’’ standard appropriate for

purposes of proposed § 465.2(b) and (c)?

Why or why not? One alternative would

define a violation as occurring

whenever a business engages in a

deceptive practice with respect to a

review or testimonial if the business

‘‘knew or could have known’’ that the

review or testimonial was deceptive.

Should the Commission adopt this

alternative? Why or why not? Should

the Commission adopt a different

knowledge requirement, and if so, what

should it be and why? Should there be

no knowledge requirement at all for

proposed § 465.2(b) and (c)? Why or

why not?

9. Under what circumstances should

a business purchasing or procuring a

consumer review know that it is fake or

false?

10. Under what circumstances should

a business disseminating or causing the

dissemination of a consumer testimonial

or celebrity testimonial know that it is

fake or false?

§ 465.3 Consumer Review Repurposing

Proposed § 465.3 would prohibit

businesses from repurposing or causing

the repurposing of a consumer review

created for one product so that it

appears to have been created for a

substantially different product.

11. Is the description of ‘‘substantially

different product’’ appropriate for

purposes of this provision? Why or why

not? If not, how should it be modified?

12. Under what circumstances do

consumers consider products to be

significantly different enough that they

should not share the same consumer

reviews?

§ 465.4 Buying Positive or Negative

Consumer Reviews

Proposed § 465.4 would prohibit

providing compensation or other

incentives in exchange for, or

conditioned on, the writing or creation

of consumer reviews expressing a

particular sentiment.

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12. Should the proposed prohibition

distinguish in any way between an

explicit and implied condition that a

consumer review express a particular

sentiment? Why or why not? If so, how

should it be addressed?

§ 465.5 Insider Consumer Reviews and

Consumer Testimonials

Proposed § 465.5(a) would prohibit an

officer or manager of a business from

writing or creating a consumer review or

consumer testimonial about the

business or one of its products or

services that fails to have a clear and

conspicuous disclosure of the officer’s

or manager’s relationship to the

business. Proposed § 465.5(b) would

prohibit a business from disseminating

a testimonial by an officer, manager,

employee, or agent, or any of their

relatives, without a clear and

conspicuous disclosure of the

relationship, when the business knew or

should have known the testimonialist’s

relationship. Proposed § 465.5(c) would

prohibit an officer or manager of a

business from asking for a consumer

review about the business or one of its

products or services from a person

related to the business, when the

solicitor knew or should have known

the prospective reviewer’s relationship,

the request results in a review without

a clear and conspicuous disclosure of

the relationship, and the requestor

failed to advise a disclosure, knew or

should have known that a review

appeared without such a disclosure and

failed to take remedial steps, or

encouraged the prospective reviewer not

to make such a disclosure.

13. Is it appropriate that proposed

§ 465.5(a) and (c) apply to ‘‘officers’’ and

‘‘managers’’? Why or why not? If not,

how should either or both prohibitions

be modified?

14. Should the term ‘‘managers’’ be

defined or described? Why or why not?

If so, how should it be defined or

described?

15. Is it appropriate that proposed

§ 465.5(a), (b), and (c) are limited to

circumstances in which the requisite

disclosure is absent? Why or why not?

If not, how should any of the

prohibitions be modified?

16. Is it appropriate that proposed

§ 465.5(b) and (c)(1) are limited to

circumstances in which the business,

officer, or manager knew or should have

known of the relationship? Why or why

not? One alternative would be to limit

the circumstances of a violation to when

the business, officer, or manager ‘‘knew

or could have known’’ of the

relationship. Should the Commission

adopt this alternative? Why or why not?

Should the Commission adopt a

different knowledge requirement, and if

so, what should it be and why? Should

there be no knowledge requirement at

all for proposed § 465.5(b) and (c)(1)?

Why or why not?

17. Is it appropriate that § 465.5(b)

and (c) are limited to testimonials and

reviews from officers, managers,

employees, agents, or relatives? Why or

why not? If not, how should either or

both prohibitions be modified?

18. Should the Commission define or

otherwise describe the term ‘‘relative’’?

Why or why not? If so, how should it

be defined or described?

19. Is it appropriate that

§ 465.5(c)(2)(ii) is limited to

circumstances in which the requestor

knew or should have known that the

review appeared without such a

disclosure? Why or why not? One

alternative would be to limit the

circumstances of a violation to when the

requestor ‘‘knew or could have known’’

that the review appeared without such

a disclosure. Should the Commission

adopt this alternative? Why or why not?

Should the Commission adopt a

different knowledge requirement, and if

so, what should it be and why? Should

there be no knowledge requirement at

all for proposed § 465.5(c)(2)(ii)? Why or

why not?

§ 465.7 Review Suppression

Proposed § 465.7(a) would prohibit

anyone from using an unjustified legal

threat or a physical threat, intimidation,

or false accusation in an attempt to

remove or prevent a negative consumer

review. Proposed § 465.7(b) would

prohibit a merchant from

misrepresenting that the consumer

reviews displayed on its website or

platform represent most or all the

reviews submitted when it is

suppressing reviews based upon their

ratings or their negativity.

20. Is it appropriate that proposed

§ 465.7(a) focuses on the specific types

of listed threats or activities? Why or

why not? If not, how should it be

modified?

21. Is the definition of ‘‘unjustified

legal threat’’ sufficiently clear? Why or

why not? If not, how should it be

modified?

22. Is it appropriate that proposed

§ 465.7(b) is limited to circumstances in

which reviews are being suppressed

based on rating or negativity? Why or

why not? If not, how should it be

modified?

23. Is it appropriate that proposed

§ 465.7(b) is limited to the

misrepresentations described therein?

Why or why not? If not, how should it

be modified?

XI. Comment Submissions

You can file a comment online or on

paper. For the Commission to consider

your comment, we must receive it on or

before September 29, 2023. Write

‘‘Consumer Reviews and Testimonials

NPRM, R311003’’ on your comment.

Your comment—including your name

and your state—will be placed on the

public record of this proceeding,

including, to the extent practicable, on

the website https://

www.regulations.gov.

Because of the agency’s heightened

security screening, postal mail

addressed to the Commission will be

subject to delay. We strongly encourage

you to submit your comments online

through the https://www.regulations.gov

website. To ensure that the Commission

considers your online comment, please

follow the instructions on the web-

based form.

If you file your comment on paper,

write ‘‘Consumer Reviews and

Testimonials NPRM, R311003’’ on your

comment and on the envelope, and mail

your comment to the following address:

Federal Trade Commission, Office of the

Secretary, 600 Pennsylvania Avenue

NW, Suite CC–5610 (Annex F),

Washington, DC 20580. If possible,

please submit your paper comment to

the Commission by overnight service.

Because your comment will be placed

on the public record, you are solely

responsible for making sure that your

comment does not include any sensitive

or confidential information. In

particular, your comment should not

contain sensitive personal information,

such as your or anyone else’s Social

Security number; date of birth; driver’s

license number or other state

identification number or foreign country

equivalent; passport number; financial

account number; or credit or debit card

number. You are also solely responsible

for making sure your comment does not

include any sensitive health

information, such as medical records or

other individually identifiable health

information. In addition, your comment

should not include any ‘‘[t]rade secret or

any commercial or financial information

which . . . is privileged or

confidential’’—as provided in Section

6(f) of the FTC Act, 15 U.S.C. 46(f), and

FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2)—

including, in particular, competitively

sensitive information such as costs,

sales statistics, inventories, formulas,

patterns, devices, manufacturing

processes, or customer names.

Comments containing material for

which confidential treatment is

requested must be filed in paper form,

must be clearly labeled ‘‘Confidential,’’

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See 15 U.S.C. 57a(i)(2)(A); 16 CFR 1.18(c).

and must comply with FTC Rule 4.9(c),

16 CFR 4.9(c). In particular, the written

request for confidential treatment that

accompanies the comment must include

the factual and legal basis for the

request and must identify the specific

portions of the comment to be withheld

from the public record. See FTC Rule

4.9(c). Your comment will be kept

confidential only if the General Counsel

grants your request in accordance with

the law and the public interest. Once

your comment has been posted publicly

at https://www.regulations.gov—as

legally required by FTC Rule 4.9(b), 16

CFR 4.9(b)—we cannot redact or remove

your comment, unless you submit a

confidentiality request that meets the

requirements for such treatment under

FTC Rule 4.9(c), and the General

Counsel grants that request.

Visit the FTC website to read this

document and the news release

describing it. The FTC Act and other

laws the Commission administers

permit the collection of public

comments to consider and use in this

proceeding as appropriate. The

Commission will consider all timely

and responsive public comments it

receives on or before September 29,

2023. For information on the

Commission’s privacy policy, including

routine uses permitted by the Privacy

Act, see https://www.ftc.gov/

siteinformation/privacypolicy.

XII. Communications by Outside

Parties to the Commissioners or Their

Advisors

Pursuant to FTC Rule 1.18(c)(1)(i)–(ii),

the Commission has determined that

communications with respect to the

merits of this proceeding from any

outside party to any Commissioner or

Commissioner advisor shall be subject

to the following treatment. Written

communications and summaries or

transcripts of oral communications shall

be placed on the rulemaking record if

the communication is received before

the end of the public comment period

in response to this NPRM. They shall be

placed on the public record if the

communication is received later. Unless

the outside party making an oral

communication is a member of

Congress, such communications are

permitted only if advance notice is

published in the Weekly Calendar and

Notice of Sunshine Meetings.

252

List of Subjects in 16 CFR Part 465

Advertising.

■For the reasons set forth above, the

Federal Trade Commission proposes to

amend title 16, chapter I, subchapter D

of the Code of Federal Regulations by

adding part 465 to read as follows:

PART 465—RULE ON THE USE OF

CONSUMER REVIEWS AND

TESTIMONIALS

Sec.

465.1 Definitions.

465.2 Fake or False Consumer Reviews,

Consumer Testimonials, or Celebrity

Testimonials.

465.3 Consumer Review Repurposing.

465.4 Buying Positive or Negative

Consumer Reviews.

465.5 Insider Consumer Reviews and

Consumer Testimonials.

465.6 Company-Controlled Review websites

or Entities.

465.7 Review Suppression.

465.8 Misuse of Fake Indicators of Social

Media Influence.

465.9 Severability.

Authority: 15 U.S.C. 57a.

§ 465.1 Definitions.

(a) Business means an individual,

partnership, corporation, or any other

commercial entity that sells products or

services.

(b) Celebrity testimonial means an

advertising or promotional message

(including verbal statements,

demonstrations, or depictions of the

name, signature, likeness, or other

identifying personal characteristics of

an individual) that consumers are likely

to believe reflects the opinions, beliefs,

or experiences of a well-known person

who purchased, used, or otherwise had

experience with a product, service, or

business.

(c) Clear and conspicuous means that

a required disclosure is easily noticeable

(i.e., difficult to miss) and easily

understandable by ordinary consumers,

including in all of the following ways:

(1) In any communication that is

solely visual or solely audible, the

disclosure must be made through the

same means through which the

communication is presented. In any

communication made through both

visual and audible means, such as a

television advertisement, the disclosure

must be presented simultaneously in

both the visual and audible portions of

the communication even if the

representation requiring the disclosure

is made in only one means.

(2) A visual disclosure, by its size,

contrast, location, the length of time it

appears, and other characteristics, must

stand out from any accompanying text

or other visual elements so that it is

easily noticed, read, and understood.

(3) An audible disclosure, including

by telephone or streaming video, must

be delivered in a volume, speed, and

cadence sufficient for ordinary

consumers to easily hear and

understand it.

(4) In any communication using an

interactive electronic medium, such as

social media or the internet, the

disclosure must be unavoidable. A

disclosure is not clear and conspicuous

if a consumer must take any action,

such as clicking on a hyperlink or

hovering over an icon, to see it.

(5) The disclosure must use diction

and syntax understandable to ordinary

consumers and must appear in each

language in which the representation

that requires the disclosure appears.

(6) The disclosure must comply with

these requirements in each medium

through which it is received, including

all electronic devices and face-to-face

communications.

(7) The disclosure must not be

contradicted or mitigated by, or

inconsistent with, anything else in the

communication.

(8) When the representation or sales

practice targets a specific audience,

such as children, the elderly, or the

terminally ill, ‘‘ordinary consumers’’

includes members of that group.

(d) Consumer review means a

consumer’s evaluation, or a purported

consumer’s evaluation, of a product,

service, or business that is submitted by

the consumer or purported consumer

and that is published to a website or

platform dedicated in whole or in part

to receiving and displaying such

evaluations. For the purposes of this

Rule, consumer reviews include

consumer ratings regardless of whether

they include any text or narrative.

(e) Consumer testimonial means an

advertising or promotional message

(including verbal statements,

demonstrations, or depictions of the

name, signature, likeness, or other

identifying personal characteristics of

an individual) that consumers are likely

to believe reflects the opinions, beliefs,

or experiences of a consumer who has

purchased, used, or otherwise had

experience with a product, service, or

business.

(f) Indicators of social media

influence means any metrics used by the

public to make assessments of an

individual’s or entity’s social media

influence, such as followers, friends,

connections, subscribers, views, plays,

likes, reposts, and comments.

(g) Officers include owners,

executives, and managing members of a

business.

(h) Purchase a consumer review

means to provide something of value,

such as money, goods, or another

review, in exchange for a consumer

review.

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(i) Reviewer means the author or

purported author of a consumer review.

(j) Substantially different product

means a product that differs from

another product in one or more material

attributes other than color, size, count,

or flavor.

(k) Testimonialist means the person

giving or purportedly giving a consumer

testimonial or celebrity testimonial.

(l) An unjustified legal threat is a

threat to initiate or file a baseless legal

action, such as an action for defamation

that challenges truthful speech or

matters of opinion.

§ 465.2 Fake or False Consumer Reviews,

Consumer Testimonials, or Celebrity

Testimonials.

(a) It is an unfair or deceptive act or

practice and a violation of this Rule for

a business to write, create, or sell a

consumer review, consumer testimonial,

or celebrity testimonial:

(1) by a reviewer or testimonialist

who does not exist;

(2) by a reviewer or testimonialist

who did not use or otherwise have

experience with the product, service, or

business that is the subject of the review

or testimonial; or

(3) that materially misrepresents,

expressly or by implication, the

reviewer’s or testimonialist’s experience

with the product, service, or business

that is the subject of the review or

testimonial.

(b) It is an unfair or deceptive act or

practice and a violation of this Rule for

a business to purchase a consumer

review, or to disseminate or cause the

dissemination of a consumer testimonial

or celebrity testimonial, about the

business or one of its products or

services, which the business knew or

should have known:

(1) was by a reviewer or testimonialist

who does not exist;

(2) was by a reviewer or testimonialist

who did not use or otherwise have

experience with the product, service, or

business that is the subject of the review

or testimonial; or

(3) materially misrepresents,

expressly or by implication, the

reviewer’s or testimonialist’s experience

with the product, service, or business

that is the subject of the review or

testimonial.

(c) It is an unfair or deceptive act or

practice and a violation of this Rule for

a business to procure a consumer review

for posting on a third-party platform or

website, about the business or one of its

products or services, which the business

knew or should have known:

(1) was by a reviewer who does not

exist;

(2) was by a reviewer who did not use

or otherwise have experience with the

product, service, or business that is the

subject of the review or testimonial; or

(3) materially misrepresents,

expressly or by implication, the

reviewer’s experience with the product,

service, or business that is the subject of

the review.

§ 465.3 Consumer Review Repurposing.

It is an unfair or deceptive act or

practice and a violation of this Rule for

a business to use or repurpose a

consumer review written or created for

one product so that it appears to have

been written or created for a

substantially different product, or to

cause such use or repurposing.

§ 465.4 Buying Positive or Negative

Consumer Reviews.

It is 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, regarding the product,

service, or business that is the subject of

the review.

§ 465.5 Insider Consumer Reviews and

Consumer Testimonials.

It is an unfair or deceptive act or

practice and a violation of this Rule for:

(a) an officer or manager of a business

to write or create a consumer review or

consumer testimonial about the

business or one of its products or

services that fails to have a clear and

conspicuous disclosure of the officer’s

relationship to the business;

(b) a business to disseminate or cause

the dissemination of a consumer

testimonial about the business or one of

its products or services by one of its

officers, managers, employees, or agents,

or any of their relatives which fails to

have a clear and conspicuous disclosure

of the testimonialist’s relationship to the

business or to the officer, manager,

employee, or agent, when the business

knew or should have known the

testimonialist’s relationship to the

business or to one of its officers,

employees, or agents; or

(c) an officer or manager of a business

to solicit or demand a consumer review

about the business or one of its products

or services from an employee, from an

agent, or from a relative of any such

officer, manager, employee, or agent,

when:

(1) the officer or manager knew or

should have known the prospective

reviewer’s relationship to the business

or to one of its officers, managers,

employees, or agents,

(2) the officer or manager:

(i) did not instruct the prospective

reviewer to disclose clearly and

conspicuously that relationship,

(ii) knew or should have known that

such a review appeared without such a

disclosure and failed to take remedial

steps, or

(iii) encouraged the prospective

reviewer not to make such a disclosure,

and

(3) the solicitation or demand results

in the prospective reviewer writing or

creating such a review without such a

disclosure.

§ 465.6 Company-Controlled Review

websites or Entities.

It is an unfair or deceptive act or

practice and a violation of this Rule for

a business to represent, expressly or by

implication, that a website,

organization, or entity that it controls,

owns, or operates provides independent

reviews or opinions about a category of

businesses, products, or services

including the business or one or more

of its products or services.

§ 465.7 Review Suppression.

It is an unfair or deceptive act or

practice and a violation of this Rule:

(a) for anyone to use an unjustified

legal threat or a physical threat,

intimidation, or false accusation in an

attempt to prevent a consumer review or

any portion thereof from being written

or created or cause a consumer review

or any portion thereof to be removed; or

(b) for a business to misrepresent,

expressly or by implication, that the

consumer reviews of one or more of its

products or services displayed on its

website or platform represent most or all

the reviews submitted to the website or

platform when reviews are being

suppressed (i.e., not displayed) based

upon their ratings or their negativity.

For purposes of this paragraph, a review

is not considered suppressed based

upon rating or negativity if the

suppression occurs because of any of

the following reasons, so long as the

criteria for withholding reviews are

applied to all reviews submitted

without regard to the favorability of the

review:

(1) the review contains:

(i) trade secrets or privileged or

confidential commercial or financial

information,

(ii) libelous, harassing, abusive,

obscene, vulgar, or sexually explicit

content,

(iii) the personal information or

likeness of another person,

(iv) content that is discriminatory

with respect to race, gender, sexuality,

ethnicity, or another protected class, or

(v) content that is clearly false or

misleading;

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(2) the seller reasonably believes the

review is fake; or

(3) the review is wholly unrelated to

the products or services offered by or

available at the website or platform.

§ 465.8 Misuse of Fake Indicators of Social

Media Influence.

It is an unfair or deceptive act or

practice and a violation of this Rule for

anyone to:

(a) sell or distribute fake indicators of

social media influence that can be used

by persons or businesses to

misrepresent their influence or

importance for a commercial purpose;

or

(b) purchase or procure fake

indicators of social media influence to

misrepresent their influence or

importance for a commercial purpose.

§ 465.9 Severability.

The provisions of this part are

separate and severable from one

another. If any provision is stayed or

determined to be invalid, the remaining

provisions shall continue in effect.

By direction of the Commission.

April J. Tabor,

Secretary.

[FR Doc. 2023–15581 Filed 7–28–23; 8:45 am]

BILLING CODE 6750–01–P

DEPARTMENT OF HOUSING AND

URBAN DEVELOPMENT

24 CFR Part 203

[Docket No. FR–6353–P–01]

RIN 2502–AJ66

Modernization of Engagement With

Mortgagors in Default

AGENCY

: Office of the Assistant

Secretary for Housing—Federal Housing

Commissioner, Department of Housing

and Urban Development, HUD.

ACTION

: Proposed rule.

SUMMARY

: HUD’s regulations require

that mortgagees of Federal Housing

Administration (FHA) insured single

family mortgages (mortgagees) meet in

person, or make a reasonable effort to

meet in person, with mortgagors who

are in default on their mortgage

payments. This rule proposes to

modernize this requirement by updating

HUD’s regulation to better align with

advances in electronic communication

technology and mortgagor engagement

preferences, while preserving consumer

protections. Specifically, this rule

proposes to update HUD’s current in-

person, face-to-face meeting

requirements by permitting mortgagees

to utilize methods of communication

most likely to receive a response from

the mortgagor as determined by the

Secretary, including electronic and

other remote communication methods,

such as telephone calls or video calls, to

meet with mortgagors who are in default

on their mortgage payments. This

proposed rule would also expand the

meeting requirement to all mortgagors

in default, including mortgagors who do

not reside in the mortgaged property

and those with a mortgaged property not

within 200 miles of their mortgagee, its

servicer, or a branch office of either.

DATES

: Comment Due Date: September

29, 2023.

ADDRESSES

: There are two methods for

submitting public comments. All

submissions must refer to the above

docket number and title.

1. Electronic Submission of

Comments. Comments may be

submitted electronically through the

Federal eRulemaking Portal at

www.regulations.gov. HUD strongly

encourages commenters to submit

comments electronically. Electronic

submission of comments allows the

commenter maximum time to prepare

and submit a comment, ensures timely

receipt by HUD, and enables HUD to

make comments immediately available

to the public. Comments submitted

electronically through

www.regulations.gov can be viewed by

other commenters and interested

members of the public. Commenters

should follow the instructions provided

on that website to submit comments

electronically.

2. Submission of Comments by Mail.

Comments may be submitted by mail to

the Regulations Division, Office of

General Counsel, Department of

Housing and Urban Development, 451

7th Street SW, Room 10276,

Washington, DC 20410–0500.

Note: To receive consideration as a public

comment, comments must be submitted

through one of the two methods specified

above.

Public Inspection of Public

Comments. HUD will make all properly

submitted comments and

communications available for public

inspection and copying during regular

business hours at the above address.

Due to security measures at the HUD

Headquarters building, you must

schedule an appointment in advance to

review the public comments by calling

the Regulations Division at 202–708–

3055 (this is not a toll-free number).

HUD welcomes and is prepared to

receive calls from individuals who are

deaf or hard of hearing, as well as

individuals with speech or

communication disabilities. To learn

more about how to make an accessible

telephone call, please visit https://

www.fcc.gov/consumers/guides/

telecommunications-relay-service-trs.

Copies of all comments submitted are

available for inspection and

downloading at www.regulations.gov.

FOR FURTHER INFORMATION CONTACT

:

Graham Mayfield, Acting Director,

Office of Single Family Asset

Management, Department of Housing

and Urban Development, 451 7th Street

SW, Room 9278, Washington, DC 20410,

telephone 202–768–2838 (this is not a

toll-free number). HUD welcomes and is

prepared to receive calls from

individuals who are deaf or hard of

hearing, as well as individuals with

speech or communication disabilities.

To learn more about how to make an

accessible telephone call, please visit

https://www.fcc.gov/consumers/guides/

telecommunications-relay-service-trs.

SUPPLEMENTARY INFORMATION

: First

codified in 1976, HUD’s regulations at

24 CFR 203.604 require mortgagees to

meet in person, or make a reasonable

effort to meet in person, with

mortgagors who are in default on their

mortgage payment. This requirement for

an in-person meeting with the

mortgagor, commonly referred to as the

‘‘face-to-face meeting’’ requirement,

originated during a time when mortgage

lending and servicing activities were

conducted in person at locations in the

local communities a mortgagee served.

At that time, a ‘‘face-to-face’’ meeting

was the most effective way to discuss

and facilitate loss mitigation options

because knowledgeable mortgagee staff

were available at locations near the

mortgaged property. Beginning in the

mid-1990s, many mortgagees began

consolidating origination and servicing

activities in centralized locations.

Today, many mortgagees have a national

presence and often employ a single

national servicing center or a limited

number of regional servicing centers,

operate without retail places of business

altogether, and tend to conduct

origination and servicing activities with

employees and clients not being in close

physical proximity. In addition,

mortgagors prefer to conduct business

online or through other remote methods.

This proposed rule would permit the

use of electronic and other remote

communication methods to make it

more convenient for mortgagors in

default to participate in meetings with

their mortgagee.

The current face-to-face meeting

requirement also reflects a time when

electronic methods for conducting

virtual meetings were not widely

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ddrumheller on DSK120RN23PROD with PROPOSALS1