An In-House Lawyer's Guide to Consumer Reviews and Testimonials

November 12, 2024    

With the Federal Trade Commission's (FTC) new rules on reviews and testimonials taking effect in October 2024, businesses face enhanced requirements and scrutiny around consumer review practices. Speakers provided practical guidance on navigating these requirements while maintaining effective consumer engagement programs, with particular focus on the intersection of marketing goals and regulatory compliance.

Key Takeaways

The FTC's new rule represents a significant shift in the regulation of consumer reviews and testimonials, implementing civil penalty authority and specific prohibitions against deceptive practices. The rule, which went into effect in October 2024, builds upon previous enforcement actions and guidance but adds teeth to the FTC's oversight capabilities. Most notably, it establishes clear definitions of fake or false reviews and provides detailed guidance for businesses on prohibited practices.

The regulations create specific requirements around review solicitation and management, particularly focusing on the relationship between incentives and reviews. Companies can no longer provide compensation or incentives conditioned on positive sentiment, and must implement clear and conspicuous disclosures for any insider reviews, including those from employees, officers, managers, agents, and their relatives. This extends beyond direct employees to encompass a broader network of connected individuals whose relationship to the company would be material to consumers evaluating their reviews.

The rule also addresses emerging issues in digital marketing, particularly regarding fake indicators of social media influence and company-controlled review websites. The "knew or should have known" standard for fake social media metrics creates new compliance challenges for businesses engaging with influencers or managing social media presence. Additionally, the rule establishes clear guidelines around review suppression and manipulation, prohibiting practices that prevent or remove negative reviews while allowing legitimate moderation of false, misleading, or irrelevant content. These provisions reflect the FTC's growing focus on digital authenticity and transparency in online marketing practices.

Action Steps

1. Review existing review solicitation and management practices for compliance with new rules.
2. Implement clear disclosure protocols for insider reviews and testimonials.
3. Update incentive programs to avoid conditioning rewards on review sentiment.
4. Develop procedures for identifying and addressing fake or false reviews.
5. Establish monitoring systems for social media influence indicators.
6. Create documentation processes for review management decisions.
7. Train relevant personnel on new requirements and compliance procedures.
8. Review website disclosures regarding review collection and display practices.
9. Implement controls to prevent review suppression or manipulation.
10. Maintain records of review verification and authenticity measures.

CLE Materials

• Session Presentation
• Federal Register — Trade Regulation Rule on the Use of Consumer Reviews and Testimonials
• FTC — Trade Regulation Rule on the Use of Consumer Reviews and Testimonials

Source

"An In-House Lawyer's Guide to Consumer Reviews and Testimonials." Laura Kim, partner at Covington & Burling LLP; Matt Fitzpatrick, VP, associate general counsel at The Procter & Gamble Company. ANA Masters of Advertising Law Conference, 11/12/24.