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Tackling fake product reviews a challenge for FTC, states

Fake product reviews can be harmful not just to consumers, but to businesses if their product is negatively targeted by bad actors.

Consumers often rely on product reviews before making purchases. However, fake reviews are becoming increasingly more common and more difficult to spot, which experts believe mandates additional action from Congress and federal enforcement agencies.

Fake reviews are often coordinated efforts by criminal entities to positively or negatively affect businesses and products. The reviews are designed to raise product visibility on e-commerce platforms such as Amazon and Google while defeating algorithms the platforms use to spot such reviews, said John Breyault, vice president of public policy, telecommunications and fraud at the National Consumers League, a nonprofit based in Washington, D.C.

"What we're dealing with now is an organized threat not just to consumers who may end up purchasing products that are subpar or at worst unsafe, but it also is a threat to honest businesses," Breyault said during a webinar Thursday hosted by the Center for Data Innovation, part of the nonprofit Information Technology and Innovation Foundation.

State attorneys general and federal enforcement agencies, including the Federal Trade Commission (FTC), are starting to tackle fake product reviews. But nuances in how fake reviews are generated mean that creating an overarching rule to address the problem is a challenge.

Addressing fake product reviews

The FTC and six state attorneys general in August 2022 filed a lawsuit against Roomster, a rental listing platform that allegedly paid for fake reviews and charged consumers seeking affordable housing for access to fake listings.

It's one of the first such cases the FTC has filed over fake reviews -- and Roomster pushed back with a motion to dismiss the case in October 2022. Roomster claimed the FTC lacks the constitutional authority to move forward with the lawsuit. The company also stated in its motion to dismiss the case that it cannot be held liable for user reviews under the Communications Decency Act.

In court documents, Roomster said it has always shared the government's goal "of protecting its users from fraudsters and have always done their best to quickly adapt Roomster's antifraud programs to the shifting challenges posed by increasingly sophisticated fraudsters."

What we're dealing with now is an organized threat not just to consumers who may end up purchasing products that are subpar or at worst unsafe, but it also is a threat to honest businesses.
John BreyaultVice president of public policy, telecommunications and fraud, National Consumers League

The Roomster case doesn't get to some of the more complicated questions surrounding fake reviews, such as how to reach international entities engineering fake reviews, said Dan Gilman, senior scholar of competition policy at the International Center for Law & Economics and a former FTC attorney advisor. Gilman spoke during the webinar with Breyault.

He said it also doesn't address whether to hold accountable businesses that incentivize consumers to leave reviews either through discounts or monetary rewards.

"It is a complex moving target," Gilman said.

The FTC announced in October 2022 its intent to explore a potential rule to combat fake reviews and deceptive endorsements, seeking comments from stakeholders on what such a rule should entail.

For Breyault, reviews stemming from incentives, for example, should be labeled as such to provide transparency to businesses and consumers reading the review.

If fake reviews go unchecked, he said, it will cause long-term damage by eroding trust in product reviews.

"They are an incredibly powerful source of information that consumers use when making important buying decisions," Breyault said. "Without action, I can see a day in the future where user reviews will lose their utility for consumers, and there are serious consequences to that."

Makenzie Holland is a news writer covering big tech and federal regulation. Prior to joining TechTarget Editorial, she was a general reporter for the Wilmington StarNews and a crime and education reporter at the Wabash Plain Dealer.

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