Influencing is a sought-after job these days! People are willing to do anything, including deceiving their “friends” and “followers”, if it means getting added to a PR list. In fact, Artios.io reviewed the Google searches made in 2022 and found 2,833,000 queries regarding the sale of social media followers! Now, the Federal Trade Commission is officially cracking down on fakes. From fake reviews and fake testimonials to buying and selling fake followers- the FTC has had enough.

On August 14, 2024, The Federal Trade Commission announced a final rule to combat deceptive marketing tactics. According to FTC Chair Lina M. Khan, the Use of Consumer Reviews and Testimonials rule is designed to “protect Americans from getting cheated, put businesses that unlawfully game the system on notice, and promote markets that are fair, honest, and competitive.” The new rule allows the Federal Trade Commission to obtain court orders demanding consumer compensation. Additionally, courts will be allowed to impose civil penalties against violators under Section 5(m)(1)(A) of the FTC Act, 15 U.S.C. 45(m)(1)(A) as well.

Use of Consumer Reviews and Testimonials Final Rule

The Use of Consumer Reviews and Testimonials final rule prohibits:

1. Reviews or endorsements by people who do not exist, who did not actually use or test the product or service, or who were misrepresenting their experience with it;
2. Review hijacking, where a seller steals or repurposes reviews of another product;
3. Marketers offering compensation or other incentives in exchange for, or conditioned on, the writing of positive or negative consumer reviews;
4. Owners, officers, or managers of a company (a) writing reviews or testimonials of their own products or services, or publishing testimonials by their employees or family members, which fail to provide clear and conspicuous disclosures of those relationships, or (b) soliciting reviews from employees or relatives without instructing them to disclose their relationships;
5. The creation or operation of websites, organizations, or entities that purportedly provide independent reviews or opinions of products or services but are, in fact, created and controlled by the companies offering the products or services;
6. Misrepresenting that the consumer reviews displayed represent most or all of the reviews submitted when, in fact, reviews are being suppressed based upon their negativity;
7. The suppression of customer reviews by physical threat or unjustified legal threat;
8. Selling, distributing, or buying followers, subscribers, views, and other indicators of social media influence.

The Federal Trade Commission announced that swindlers will be penalized with a fine of up to $51,744 per violation. A fine that many influencers will most likely be forced to pay, based on a study by Influencer Marketing.ai. It “concluded that 1 in 4 Instagram influencers [purchase] 15% of their total followers and every 3 in 4 influencers [purchase] over 10,000 followers.”

Indicators of Social Media Influence

Fake reviews and testimonials have always been prohibited (or, at the very least, seriously discouraged). Fake indicators of social media influence, though? What does that even mean?

According to the Federal Trade Commission, “fake social media influence indicators” can be:

1. Followers;
2. Friends;
3. Connections;
4. Subscribers;
5. Views;
6. Plays;
7. Likes;
8. Reposts;
9. Comments;
10. And any metrics used by the public to make assessments of an individual’s or entity’s social media influence.

However, the FTC clarifies in the final rule that, “it is not the creation of the bot or fake account, itself, that the rule makes illegal, but the use of the bot or fake account to follow another user, watch another user’s videos, or create other fake indicia of social media influence.”

It’s important to note, though, even if you’re not buying influence indicators, you can still face legal action for selling fraudulent influence! According to the FTC, “Under § 465.2(a), an individual who is in the business of writing, creating, selling, or brokering reviews could be liable for creating consumer reviews that are fake or false.”

Deceptive Marketing and Civil Lawsuits

Another key point to remember: the Use of Consumer Reviews and Testimonials rule isn’t an exhaustive list of deceptive tactics to avoid! Since the rise of digital marketing, the Federal Trade Commission has taken a stricter stance on innumerable advertising tactics, business practices, and regulations concerning transparency and consumer protection.

Below, we’ll discuss what makes a practice deceptive and explore unfair practices to avoid.

What is a Deceptive Business Practice?

An act or practice is deceptive when:

• An interpretation of the representation, omission, or practice is not considered reasonable under the circumstances;
• A representation, omission, or practice misleads or is likely to mislead consumers;
• Misleading representation, omission, or practice is material.

Examples of Deceptive Business Practices

• Defamation is the act of making false statements with the intent to hurt or damage another’s reputation. However, the false statement(s) must have been seen or heard by a third-party and must clearly identify the defamed party.
• Product Disparagement is when a competitor makes false or misleading statements about your product or service.
• Trade Libel is the intentional publication of disparagement, which results in pecuniary damages to your company or business.
• Tortious Interference is when a rival wrongfully interferes with your contractual or business relationships.
• False Representation of goods or services- whether that be the source, the quantity, the benefits, the characteristics, or the condition of the product.

How to Ensure Digital Advertising Compliance

Contact the social media law attorneys at RM Warner Law. Whether you’re facing an FTC investigation or dealing with compliance issues, we know how to help! Call 1-866-570-8585 or fill out our contact form to schedule a consultation.

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