Welcome to this in-depth look at the FTC's new rule on AI-generated reviews. This rule is a significant development in the fight against deceptive online practices, and we'll be exploring its key points, impact, and implications.

The FTC, led by Chair Lina Khan, has taken a firm stance against the use of AI-generated reviews, recognizing their potential to mislead consumers and distort the marketplace.

The rule prohibits the use of AI-generated reviews and testimonials that misrepresent a product's popularity or legitimacy.

This includes fake reviews from individuals who don't exist or haven't used the product, as well as reviews written by company insiders without clear disclosure.

The rule also addresses review suppression, where companies use threats or intimidation to prevent or delete negative reviews.

The FTC is targeting company-controlled review websites that claim to be independent but are actually controlled by the company.

"Fake reviews not only waste people's time and money, but also pollute the marketplace and divert business away from honest competitors. By strengthening the FTC's toolkit to fight deceptive advertising, the final rule will protect Americans from getting cheated, put businesses that unlawfully game the system on notice, and promote markets that are fair, honest, and competitive." - Lina Khan, 2024

The rule also extends to social media, prohibiting the misuse of fake social media indicators like artificial followers, subscribers, or likes generated by bots.

This aims to prevent the inflation of social media profiles' popularity and ensure that users are not misled by artificially inflated numbers.

The FTC's rule has been approved unanimously and will become effective 60 days after its publication in the Federal Register.

The maximum civil penalty for violating the rule is $51,744 per violation.

This rule sends a clear message to businesses that engaging in deceptive review practices will have serious consequences.

The FTC's rule is a significant step towards restoring consumer trust in online reviews and promoting a fair and competitive marketplace.