US FTC finalizes ban on companies buying and selling fake online reviews

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By Jody Godoy

(Reuters) – The U.S. Federal Trade Commission on Wednesday finalized a ban on companies knowingly buying or selling fake online reviews, giving the agency the power to levy fines against the shadowy practice.

The ban covers trafficking in fake reviews, whether by non-existent customers, company insiders or artificial intelligence. It also prohibits buying and selling fabricated views or followers on social media, and using intimidation tactics to remove negative reviews.

The FTC can seek a maximum penalty of up to around $51,744 per violation.

“Fake reviews not only waste people’s time and money, but also pollute the marketplace and divert business away from honest competitors,” FTC Chair Lina Khan said in a statement.

The rule does not require platforms that simply publish consumer reviews to verify their veracity.

The rule garnered some support and input from trade groups and businesses, including Alphabet’s Google, Amazon.com Inc and review site Yelp.

Yelp General Counsel Aaron Schur welcomed the rule in a statement on Wednesday, saying the company had long prohibited the practices the rule bans.

“We believe the enforcement of this new rule will improve the review landscape for consumers and help level the playing field for businesses,” he said.

Teresa Murray, a consumer advocate at U.S. Public Interest Research Group, said the rule was an important protection for online shoppers, 90% of whom base purchase decisions in part on reviews.

“We hope this puts fear in companies so they do the right thing, even if it’s just because they’re afraid of the consequences,” Murray said.

(Reporting by Jody Godoy in New York; Editing by Jonathan Oatis and Jamie Freed)