The FTC Sets the Table

Breaking down the FTC’s latest landmark ruling and its ripple effect on our space.

Written by Brook Schaaf

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Following a 5-to-0 vote last week, the FTC announced its long-anticipated final rule around reviews, to be enforced 60 days after publication in the Federal Register. FTC Chair Lina M. Khan said, “Fake reviews not only waste people’s time and money, but also pollute the marketplace and divert business away from honest competitors.”

Here, a bullet point summary of the complete final rule:

• No fake consumer or celebrity reviews or testimonials.
• No compensating reviews, positive or negative.
• No insider reviews or testimonials.
• No company-controlled review websites.
• No review suppression.
• No buying social media indicators, such as followers or bot impressions.

These rules carry a “maximum civil penalty” of $51,744 per violation, but the announcement ends with a sober advisory: “As the Commission noted previously, case-by-case enforcement without civil penalty authority might not be enough to deter clearly deceptive review and testimonial practices.” The release went on to note that the Supreme Court “hindered the FTC’s ability to seek monetary relief for consumers under the FTC Act” in a recent ruling. 

For my two cents, our channel would be better off if low-quality review sites disappeared entirely because they bleed away the trust and authenticity that is otherwise so powerful. Unfortunately, based on the above comments and past actions, one guesses enforcement will be selective, perhaps so much so that bad sites monetizing with affiliate links might continue to act with impunity. (Side note: The most typical offenders are not affiliate sites but rather retailers and platforms like Amazon and Yelp.) 

This does not ban the financial ecosystem around reviews. Tricia Meyer, an attorney and the Executive Director of the Performance Marketing Association, was quoted in Hello Partner: “In my opinion, the brand can pay for a review where the reviewer has actually used the product, as long as the brand allows the reviewer to state their own opinions of the product.” Presumably, monetization around a particular legitimate review could also be subsequently added to cover hybrid payments.

Consumers want real reviews in the same way they want real coupons. Some percentage will stay away from both if credibility is lacking. The following might help build trust and improve the information marketplace:

• Publishers provide information, whether page-visible or in the metadata of an article, including the name(s) of the natural person(s) who wrote it and whether the reviewer(s) handled an item (e.g., a kitchen gadget) or were physically present for an experience (e.g., a hotel stay). A monetization advisory for commercial links should also be in place. 
• States pass legislation allowing civil penalties against bad actors. 

Providing the first piece of information could be voluntary but help readers and search engines alike rank articles. Allowing for civil penalties could create enough teeth to keep publishers honest. 

Khan has no shortage of detractors, but this rule generally fulfills common-sense “weights-and-measures” expectations that everyone should support. We cannot take the popularity of the review space for granted. Networks and organizations in the affiliate space, like the PMA, should coordinate around standards to limit the damage, especially when AI content is a ready substitute.