Overview

On June 24 2024 the Federal Trade Commission officially enacted its “Fake Review” rule after a unanimous 5‑0 vote, outlawing AI‑generated testimonials, paid or incentivized reviews, undisclosed insider endorsements, and tactics that suppress negative feedback. The regulation imposes civil penalties of up to $51,744 for each violation, and Amazon sellers now risk both federal fines and platform‑level account suspensions for the same misconduct.

Key Points

• AI‑generated reviews prohibited — Using generative‑AI tools to fabricate product ratings or testimonials is now a federal violation on any e‑commerce site.
• Paid or incentivized reviews banned — Offering cash, coupons, free merchandise, or any material benefit in exchange for a review is illegal, even if the seller adds a disclaimer.
• Undisclosed insider endorsements outlawed — Employees, executives, family members, or anyone with a material connection must clearly state their relationship when posting a review.
• Review suppression illegal — Threatening legal action, sending cease‑and‑desist letters, or otherwise pressuring reviewers to delete or edit negative comments violates the rule.
• $51,744 per violation — The FTC may assess the maximum fine for each individual infraction without needing to prove actual consumer harm.
• Dual enforcement risk — Amazon can suspend or terminate a seller’s account for the same conduct that triggers FTC civil penalties, creating a two‑pronged threat.

How the FTC Fake Review Rule Works

1. Identify prohibited content — Platforms and sellers must scan product pages for reviews that were created by AI, contain undisclosed compensation, or originate from individuals with a direct stake in the product; for example, a seller who uses ChatGPT to generate a batch of five‑star comments for a new kitchen gadget must flag those entries as non‑compliant.
2. Monitor ongoing activity — Continuous monitoring tools or manual audits are required to catch new violations, such as a vendor who suddenly starts rewarding customers with a 15 % discount code in exchange for a “honest” review on the same day the rule takes effect.