Federal Trade Commission to crack down on fake online business reviews

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The Federal Trade Commission plans to crack down on businesses’ use of fake reviews and misleading information online to promote its products, the agency announced on Wednesday.

The FTC announced that it has put more than 700 major corporations and smaller businesses on formal notice for the malpractice, threatening them with thousands of dollars in fines, up to $43,792 per violation.

“The rise of social media has blurred the line between authentic content and advertising, leading to an explosion in deceptive endorsements across the marketplace,” The FTC said in a statement on Wednesday.

“Fake online reviews and other deceptive endorsements often tout products throughout the online world. Consequently, the FTC is now using its Penalty Offense Authority to remind advertisers of the law and deter them from breaking it.”

The FTC outlined a number of practices it hopes to squelch in its letter to businesses including falsely claiming an endorsement by a third party or misrepresenting whether an endorser is an actual, current, or recent user as well as making false performance claims. Other practices included failing to disclose an endorser’s connection to the company or misrepresenting a typical consumer experience.

Amazon was one of the companies the FTC alerted as part of policy.
Reed Saxon, File/AP

Major companies formally noticed include tech giants Amazon, Apple, Facebook, and Google and its YouTube video service, as well as internet service providers like AT&T and Comcast.

Others include retailer Abercrombie & Fitch, brewer Anheuser-Busch and manufacturers General Electric, General Motors and Honda. Popular shopping and review sites such as eBay and Yelp also were also noticed.

The agency emphasized that just because a company was noticed “does not in any way suggest that it has engaged in deceptive or unfair conduct.” A full list of companies listed can be found on the FTC’s website.

The FTC said there's been a rise in "deceptive endorsements."
The FTC said there’s been a rise in “deceptive endorsements.”
Jenny Kane, File/AP

“Fake reviews and other forms of deceptive endorsements cheat consumers and undercut honest businesses,” Samuel Levine, Director of the agency’s Bureau of Consumer Protection, said in a statement. “Advertisers will pay a price if they engage in these deceptive practices.”

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