Navigating the Impact of the FTC’s New Rule on Fake Reviews
As the holiday season approaches, consumers are relying more than ever on user-generated content (UGC) to make informed purchasing decisions. With the FTC’s new rule on fake reviews, brands and retailers face heightened scrutiny and potential penalties if found in violation. There are several best practices for navigating this evolving landscape that will help businesses protect themselves while enhancing consumer trust.
Understanding the FTC’s New Rule
The FTC's crackdown on fake reviews is part of a broader effort to ensure transparency and fairness in retail. Under the new rule, businesses found guilty of soliciting, disseminating or paying for fake reviews could face substantial fines. While the rule aims to protect consumers from deceptive practices, it also places significant pressure on brands and retailers to verify the authenticity of their reviews.
In essence, brand safety and consumer trust are at stake. There is no compromise.
For all companies, and particularly those with a large online presence, this development means they must be as vigilant as ever over their UGC. As consumers increasingly rely on reviews and peer content to guide their shopping choices, brands must implement robust authenticity practices to ensure the legitimacy of these reviews. Otherwise, they risk damaging their reputation and facing legal consequences.
Actionable Best Practices for Brands and Retailers
Here are the three golden rules we tell our clients to follow in order to protect the sanctity of their UGC and uphold their trustworthy reputations:
- Be transparent about how you collect user-generated content. While some customers provide ratings and reviews out of the kindness (or dissatisfaction) of their own hearts, the vast majority of reviews are gathered by brands proactively through things like request emails, sampling campaigns, or social media campaigns. If consumers are offered a free product or a chance to win something in exchange for a review, then the review should explicitly indicate this with a disclaimer. This is information shoppers want to know, and disclosing it helps build trust between consumers and your company.
- Don’t screen out negative content. Negative reviews are often misunderstood by brands as a detriment to their business, but they actually are valuable. While it’s tempting for businesses to aim for a perfect rating, consumers trust brands more when they see a mix of positive and negative feedback. In fact, too many glowing reviews can raise red flags, leading savvy shoppers to question their authenticity. Negative reviews also provide businesses with invaluable product insights and an opportunity to improve their products not just to get more sales, but also to demonstrate their commitment to customer satisfaction. By the way, with the latest FTC ruling, suppressing negative content is now illegal.
- Have a zero-tolerance policy against fake content. This is by far the most important rule. Ensure your company has a process in place to detect fake content and stop it from being posted on your site. Working with a third-party provider that uses textual moderation as well as data-driven and anti-fraud processes to verify content’s authenticity is the best way to do so.
What’s Next for the Review Landscape?
The FTC’s rule is likely to encourage a shift toward greater transparency and accountability in the reviews space. As consumers continue to value UGC as a cornerstone of their purchasing decisions, brands must adapt by ensuring that their reviews are trustworthy, balanced and credible.
Brands and retailers that prioritize authenticity, monitor review activity, and leverage both positive and negative feedback will be well-positioned to succeed in the ever-changing world of online reviews. As the holiday season brings a surge in consumer activity, companies that align their practices with the FTC’s new rule will not only protect themselves from legal risk but also enhance the trust and loyalty of their customers.
Zarina Lam Stanford is the chief marketing officer of Bazaarvoice, a UGC platform for retailers and brands.
As CMO of Bazaarvoice, Zarina leads with a customer-centric, insights-driven, and outcome-based approach to all aspects of marketing. A recognized growth catalyst, Zarina is passionate about design thinking, the art and science of being relevant, agile leadership, inclusion, and being purpose-driven.
Before joining Bazaarvoice, Zarina was Chief Communications & Marketing Officer of Rackspace Technology and held sales and marketing executive positions at IBM tenure at public and PE/VC portfolio firms including IBM, SAP, Syniti, and Rackspace Technology. A champion for diversity and inclusion and a global citizen, Zarina has in-depth hands-on experience in global and regional markets, including North America, Latin America, Europe, and Asia Pacific & Japan.
Zarina was recently named among the 2021 Outstanding 50 Asian Americans in Business by the Asian American Business Development Center (AABDC). She was also named Women of the Decade in Technology & Innovation at the Women Economic Forum in 2018.
Zarina is a Marketing Academy CMO Fellow, a Southern Methodist University MBA, and a graduate of the Asian Advanced Leadership Program at Stanford University’s Graduate School of Business. She also holds a BA in Journalism from the University of North Texas.
