The Federal Trade Commission (FTC) is launching a crackdown against AI-generated and fake reviews and warns businesses to stop such deceptive practices or risk facing massive financial penalties.
In a 5-0 vote, the FTC passed a new rule that would stop businesses from engaging in fraudulent review practices aimed at changing consumers’ opinions about products and services.
The rule will target AI-generated reviews, buying fake positive reviews and censoring negative ones. While paid review-farms are as old as the internet itself, the arrival of AI chatbots and Large Language Models (LLMs) have only worsened the situation as it allowed marketers to pump bulk content on the internet and manipulate public perception about any specific product.
Amazon is considered a hub of these fake reviews, as the platform itself claimed to delete at least 200 million fake reviews in 2020. In 2023, the company blocked over 250 million fake reviews as AI-generated content started dominating the internet and made it difficult for companies to differentiate between real and AI-generated reviews.
Another famous review website, Yelp, revealed that it found 950 “deceptive reviews” on multiple platforms in 2021.
According to the new FTC rules, creating reviews without experiencing the product yourself will also be a violation of federal law. The rules ban buying and selling of both positive and negative online reviews, while company employees providing a review of their own product will have to disclose their relationship with the company. Meanwhile, managers will not be able to review their own company or ask their employees to get reviews from their relatives.
Under the newly introduced rules, businesses will not be allowed to publish positive reviews only on their own website while deleting negative ones to manipulate public perception.
Other online fraudulent activities that are now banned under the new FTC rules include buying fake social media engagement such as fake views and likes. Violation of these rules will carry a maximum penalty of $51,744, although the specific fine will vary from case to case.
Lina M. Khan, the FTC Chair, argued that fake reviews contribute to wasting people’s time and money while also hurting honest businesses. Khan argued that the rules will help create fair competition in the market while punishing businesses that rely on fraudulent practices to make monetary gains.
Reportedly, nearly 30% to 40% of reviews online are somehow deceptive, most of which started surfacing on the internet during the coronavirus pandemic when an overwhelming number of people preferred ecommerce in the wake of lockdowns.
