As the FTC cracks down on the practice, companies could face fines of up to $43K per fake review.
As the Federal Trade Commission (FTC) strikes down on “an explosion” of businesses using social media to market themselves through misleading statements, businesses could face fines of up to $43,000 each phony review or deceptive endorsement.
The Federal Trade Commission said it has issued official warnings to approximately 700 businesses for deceptive advertising violations, warning them that they might face fines of up to $43,792 per violation.
The fact that federal regulators are taking action against the corporations in violation shows that the agency is serious about enforcing consumer protection rules. The head of the agency’s consumer protection bureau, Samuel Levine, issued a warning to firms about deceptive advertising.
“Fake reviews and other sorts of false endorsements defraud consumers and put honest firms at a disadvantage,” Levine added. “If advertisers indulge in these dishonest techniques, they will pay a price.” A number of practices identified by the FTC as unfair or deceptive were included in the notices sent to businesses, including failing to disclose an unexpected material connection with an endorser and misrepresenting that the endorser’s experience is representative of a typical consumer’s experience.
The warnings and letters come as FTC Chair Lina Khan intensifies the agency’s enforcement actions under its current jurisdiction.
See the list below for more Associated Press reporting.
Hundreds of major organizations and small businesses have been cautioned by the FTC that using phony endorsements to deceive consumers might result in fines.
“The rise of social media has blurred the distinction between genuine content and advertising, resulting in an explosion of fraudulent endorsements across the marketplace,” the FTC stated in a statement released Wednesday.
Major enterprises, significant retailers and consumer product companies, as well as leading advertisers and ad agencies, are among the companies receiving letters.
Amazon, Apple, Facebook, Google, and its YouTube video service, as well as internet service providers like AT&T and Comcast, are among them. Others include retailers Abercrombie & Fitch and brewer Anheuser-Busch, as well as manufacturers GE, GM, and Honda. eBay and Yelp, two popular purchasing and review sites, are also included.
The FTC, on the other hand, cautioned that receiving a notification does not mean a corporation has engaged in misleading or unfair practices.
The notice refers to earlier practices that the agency discovered. This is a condensed version of the information.