FTC's final rule against fake reviews: What health product brands must know

Any brand using reviews or testimonials in its marketing and advertising should take notice. In August, the Federal Trade Commission (FTC) issued the final Trade Regulation Rule on the Use of Consumer Reviews and Testimonials banning fake reviews and testimonials and allowing FTC to strengthen enforcement, seek civil penalties against violators, and deter AI-generated fake reviews.

FTC’s civil penalty authority permits the agency to seek up to $51,744 per violation. The rule specifies unfair or deceptive acts or practices involving consumer reviews or testimonials and goes into effect Oct. 21, 2024.

The adoption of this rule is another example of FTC exercising its authority to seek monetary remedies such as consumer redress and civil penalties. The Supreme Court’s 2021 decision in AMG Capital Management, which overturned decades of FTC practice, limited FTC authority to obtain monetary relief under Section 5 of the FTC Act. Adopting rules, however, allows FTC to obtain not only consumer redress but also civil penalties for violations.

Rules also serve the purpose of providing guidance to help businesses understand FTC’s positions in various areas of marketing. But unlike the less formal guidance FTC has provided in areas such as environmental marketing, the use of endorsements and testimonials, and substantiating health claims in advertising, violating a rule is a law violation, so adopting rules bumps up the threat of FTC enforcement actions.

Understanding the rule

To a large extent, the rule follows general principles outlined in FTC’s Endorsement and Testimonial Guides and applied by BBB National Programs’ National Advertising Division (NAD) in its case decisions. The rule reflects basic truth-in-advertising principles that endorsements:

The rule prohibits:

The rule focuses on the use of reviews and testimonials in ways that are clearly deceptive to consumers and does not address provisions in FTC’s Endorsement and Testimonial Guidelines relating to an influencer’s material connection disclosures. The rule only addresses material connection disclosures in the context of reviews or testimonials from company insiders.

FTC made clear that the focus on clearly unfair or deceptive conduct should not be viewed as a signal that third-party platforms do not bear responsibility for combatting fake reviews.

Precedent and case examples

The rule also bars websites that appear to have independent reviews or opinions about a category of product or service when the website is controlled by the business being reviewed, an issue that has been a frequent focus of both NAD and FTC cases. In several recent cases, for example, NAD recommended that a brand discontinue express and implied claims that a ranking was independent when the ranking was controlled by the business itself. (Cube Planning Inc. (Datarails Software), Report #7359, NAD/CARU Case Reports (August 2024); ZenBusiness Inc. (Online Corporate Formation Services), Report #7243, NAD/CARU Case Reports (December 2023); Smile Prep LLC (Smileprep.com), Report #7131, NAD/CARU Case Reports (December 2022)). The rule specifies that consumer reviews include ratings even if they do not have any text or narrative.

Consumers can be misled if a review site is not impartial and independent but influenced by a commercial relationship between the review site and the brand.

The rule also prohibits companies from using testimonials that do not reflect the experience of the consumer or misrepresent the effectiveness of the product. It is worth reminding marketers of the basic principle that testimonials must be truthful, as recent cases at both FTC and NAD have noted some lapses.

For example, in 2023, FTC and seven state attorneys general sued Google and iHeartMedia Inc. for airing deceptive endorsements by radio personalities who promoted the Google Pixel 4 phone but had never used it. In addition, several recent NAD inquiries were opened to investigate product reviews that did not reflect the honest opinions of the reviewer (Biossance Squalane & Marine Algae Eye Cream), Report #7170, NAD/CARU Case Reports (April 2024); NourishMax (NourishMax Diamond Infused Eye Cream), Report #7296, NAD/CARU Case Reports (March 2024); The Bare Beauty Babes (Advertising by The Bare Beauty Babes), Report #7162, NAD/CARU Case Reports (March 2024)).

For health-related product performance claims, which must be supported by competent and reliable scientific evidence, brands should be especially careful. Brands using testimonials to describe the experience of a consumer or expert with the product must make sure to evaluate the reliability of evidence used to support any claims or risk civil penalties.

Although the rule prohibits companies from providing compensation or other incentives in exchange for or conditioned expressly or by implication on the writing or creating a review expressing a particular sentiment, it allows a company to solicit purchasers to post reviews about their experiences with the product, service, or business. Brands can provide incentives but, following guidance from FTC’s Endorsement Guides, should instruct the reviewer to clearly and conspicuously disclose the incentive. It is also important to note that the ban on offering incentives for expressing a particular sentiment applies to implied claims about the sentiment, such as “Love our product? Leave us a review and get $5 off your next purchase.”

With the proliferation of online marketing, consumers are increasingly relying on information from reviews that evaluate and compare products. FTC’s adoption of this rule will help preserve the value of reviews to consumers by upping the ante for businesses trying to hide the unvarnished reactions of their customers, or worse, falsifying reviews and testimonials. 

Quick tips for brands

Both consumers and brands benefit from truthful advertising and understanding the rules will help achieve that goal.

If your brand is following the new rule and competitors are not, challenging the practices at NAD can be a good way to level the playing field and help build trust in the way brands use consumer reviews.