Businesses thrive on positive customer feedback, with 89% of consumers checking online reviews before purchase.
But what are the legal implications when these glowing reviews are less than genuine? Are fake reviews illegal?
Research suggests that as much as 30% of all product reviews are likely to be fake. An unsettling trend is emerging as unscrupulous businesses increasingly turn to dishonest strategies, which involve tactics such as crafting fake positive reviews, paying review sellers/brokers for glowing ratings, or requesting family and friends to falsely endorse their ventures. In some cases, this deceptive practice even extends to sabotaging competitors by posting fake negative reviews.
Countries around the world are awakening to the drastic implications of fake reviews for consumers, and are implementing laws to address this growing concern. Businesses need to stay informed of the legal landscape to avoid unknowingly engaging in illegal activities amid the changing tides of global legislation. Let's explore the facts, where to find the most up-to-date legislation, and why platforms should be striving to eradicate fake reviews first and foremost to provide an authentic and trusted user experience.
Yes. In August 2024, The Federal Trade Commission (FTC) announced a final rule to prohibit the creation, purchase and dissemination of fake consumer reviews and celebrity testimonials. This applies to both negative and positive reviews. The rule tackles AI-generated fake reviews, or cases where someone did not have actual experience with the business or its products or services. Businesses are prohibited from offering incentives or compensation to solicit reviews with a particular sentiment (positive or negative) from consumers. Businesses are not allowed to suppress reviews so that the reviews are a genuine reflection of ALL feedback received to fairly represent the company. Insider reviews, such as those written by company employees, that do not clearly indicate the reviewer’s connection to the company are also prohibited. In addition, buying or selling social media engagement (such as likes or follows) through hacked accounts or bots is also banned.
The maximum civil penalty is set to $51,744 per violation, but courts may impose lower per-violation penalties as they deem appropriate. The final rule is available here in full.
Yes. In May 2024 the UK Government passed the Digital Markets, Competition, and Consumers (DMCC) Act banning practices relating to submitting, commissioning or incentivizing someone to write fake reviews. Under the DMCC Act, a fake review is ‘a review of a product, trader or any other matter relevant to a transactional decision… that purports to be, but is not, based on a person’s genuine experience.’
Research commissioned by the UK Government found that fake reviews cause between £50 million to £312 million of detriment to UK consumer’s annually. Expected to take effect before the end of 2024, the Act prohibits businesses from publishing reviews without taking 'reasonable and proportionate steps' to prevent the publication of, and remove from publication, fake reviews and additionally, incentivized reviews that have not been declared as such. The Competition and Markets Authority (CMA) has been granted the power to impose fines of up to 10% of a company’s global turnover for companies in breaches of the Act. As the UK's competition regulator, the CMA plays a pivotal role in supporting business competition and curbing anti-competitive activities and is currently working on guidance to define obligations relating to 'reasonable and proportionate steps'. The latest updates on the DMCC Act can be found on the UK government website.
Yes. In May 2022, The European Commission introduced the EU Omnibus Directive, also known as the Enforcement and Modernization Directive, prohibiting the submission of fake reviews and the manipulation of endorsements. Through this directive, the EU aims to ensure that product reviews genuinely reflect the sentiments of real customers. Traders on online marketplaces are required to implement robust processes for verifying the authenticity of consumer reviews. Online marketplaces operating within the EU must adapt their practices to comply with these strict rules. For a thorough understanding of the implications for marketplaces affected by the EU Omnibus Directive, download our briefing document.
The severity of the fake reviews issue is underscored by recent legal action taken by Amazon against two review brokers, who have now been sentenced to 2.5 years in prison for orchestrating deceptive practices within Amazon's store. These individuals, operating from China, engaged in a scheme to sell fake reviews, both artificially boosting product rankings with positive reviews and sabotaging competitors with negative ones. Amazon's Counterfeit Crimes Unit played a crucial role in supporting law enforcement efforts, resulting in the sentencing of these brokers. This outcome serves as a stark reminder of the gravity of fake reviews, prompting the need for stringent measures and collaborative efforts to maintain the authenticity and trustworthiness of customer feedback.
While understanding the legal landscape is crucial, the implications of fake reviews extend far beyond regulatory compliance, with safety emerging as a pivotal concern. Online platforms must recognize that fake reviews pose severe risks, making it imperative to address the challenge head-on. Here are the top consequences, emphasizing the critical need for action:
In sectors such as healthcare, childcare, cosmetics and hospitality, where trust directly impacts user safety, fake reviews can result in actual harm. Consumers need to know they are choosing healthcare providers based on genuine reviews. Or that their selected childcare facility is as good as the reviews claim it to be. Fake reviews can lead to misinformed decisions, compromising safety and wellbeing as a result.
Beyond legal implications, fake reviews tarnish a platform's reputation, eroding the bedrock of trust that businesses aim to establish. The fallout can not only result in disillusioned customers, but also influence overall perception of the brand, impacting brand loyalty, and deter future engagement.
Consumers who trust fake reviews and subsequently make a purchase based on these reviews, are being misled into spending their money in a particular way. When the product or service doesn’t live up to the glowing reviews, customers can feel frustrated and cheated out of their money.
The rise of fake reviews opens doors to more threat risks. As businesses grapple with the influx of deceptive content, the potential for other threats, such as scams, increases. Online platforms must recognize that fake reviews are a trust and safety concern and take effective measures to detect them.
Another significant impact is the inherent injustice imposed on law-abiding businesses. Genuine enterprises working diligently to provide excellent products or services, and legitimately garnering authentic positive reviews from satisfied customers are overshadowed by competitors using deceptive practices to artificially boost their reputation. The unfair competition not only undermines the hard work of honest entrepreneurs, but also jeopardises the essence of a level playing field in the marketplace.
User safety and trust are paramount online, platforms must now prioritise review authenticity and actively combat deceptive practices to create a safer and more trusted digital ecosystem.
Recognizing the escalating importance of authentic consumer reviews, major industry players including Amazon, Booking.com, Expedia Group, Glassdoor, TripAdvisor, BBB, HolidayCheck, Docplanner, G2 and Trustpilot have joined forces to establish the first global Coalition for Trusted Reviews. This cross-industry collaboration signifies a shared commitment to safeguarding access to reliable consumer reviews on a global scale. The coalition's collective objective is to define best practices for hosting online reviews and share effective methods for detecting fake reviews, addressing the issue at source. This initiative underscores the united dedication of these influential companies to maintain the highest standards of integrity, transparency, and accountability in the realm of online reviews.
So, what can you do to combat fake reviews on your platform? Understanding the implications of fake reviews and the tightening legal landscape is crucial, but taking proactive measures is even more vital. With the surge in generative AI, distinguishing genuine reviews from fraudulent ones based solely on content has become increasingly challenging. Fraudsters are now able to create fake content in non-native languages and replicate their efforts at scale.
This is where Themis's proven software comes into play. Going beyond text-based content review, our AI-driven software continually analyses customer reviews to identify key risk signals and suspicious behavioral patterns. We can detect businesses seeking to enhance their profiles through paid for reviews from review sellers, businesses undermining competitors with fake negative reviews, and uncover patterns in the data to reveal fraud rings of connected users.
Connect with a member of our team today to discover how Themis can empower you to combat fake reviews, comply with legislation, safeguard your reputation, and protect your users online. Businesses that strive for authenticity in the digital world, where it’s increasingly hard to believe what you read, will thrive.
Find out how we can help protect your business against fraud. We’d love to hear from you.
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