Reed Smith Client Alerts

The Federal Trade Commission (FTC) has been increasingly interested in consumer reviews over the last year. In late June, the FTC proposed a new trade regulation rule titled “Rule on the Use of Consumer Reviews and Testimonials” (the Proposed Rule). If it becomes effective, the Proposed Rule will allow the FTC to seek monetary relief for violations of the Proposed Rule. Overall, the FTC takes the position that “advertisers should not take actions that have the effect of distorting or otherwise misrepresenting what consumers think of their products, regardless of whether the reviews are considered endorsements under the Guides.” The FTC is seeking comments on its notice of proposed rulemaking. Comments must be received by September 29, 2023.

The FTC’s Proposed Rule, codified under 16 C.F.R. part 465, would prohibit the following identified practices related to consumer reviews and testimonials.

Section 465.1 Definitions. The FTC has proposed several definitions, mostly taken from the definitions proposed in the FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising (Endorsement Guides). These definitions include “Celebrity Testimonial,” “Clear and Conspicuous,” “Consumer Review,” “Consumer Testimonial,” and Indicators of “Social Media Influence.” There are other new definitions filled with ambiguous terms such as “unjustified legal threat” (defined as “a threat to initiate or file a baseless legal action, such as an action for defamation that challenges truthful speech or matters of opinion.”). It will be interesting to see how the FTC will justify being able to clearly determine when a threat of litigation is “baseless” or whether a person’s statement is “truthful” prior to initiating an investigation where it seeks monetary penalties.

Section 465.2 Fake or False Consumer Reviews, Consumer Testimonials, or Celebrity Testimonials. The Proposed Rule states that advertisers must not write, create, or sell a consumer review, consumer testimonial, or celebrity testimonial from someone that does not exist or does not have an experience with the product or service. Advertisers must not procure or disseminate fake reviews if the advertiser knows or should know the review is from someone that does not exist or does not have an experience with the product or service.