The new rules meant to untangle online reviews from fakery and defamation

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For many businesses these days, it is critical to maintain positive reviews on internet platforms such as Yelp, Facebook and Google. This also means that businesses are exposed to reviews that are false or potentially defamatory. As a defamation attorney, I often get requests to start a defamation lawsuit to get posts taken down. New federal rules that go into effect this fall are meant to protect consumers from fake positive reviews but also place limitations on businesses threatening consumers who make negative, but not provably false, online reviews.

The growing importance of online reviews has created a temptation for businesses to take shortcuts to try to artificially boost their ratings. According to the New York Times, the business of providing fake consumer reviews, likes and testimonials online has become a billion-dollar industry. The Federal Trade Commission (FTC) is cracking down on this practice and recently issued new rules addressing false reviews or testimonials.

The FTC justified the new rules as follows: “Fake reviews and testimonials have polluted the marketplace. They harm the many consumers relying on them to pick products and providers, subverting people’s ability to make informed decisions. They also hurt competitors who work hard to comply with the law.”

The new rule prohibits the following practices, which the FTC now considers as deceptive or unfair trade practices:

• Writing, selling or buying fake or false consumer reviews

• Writing, selling or disseminating fake or false testimonials

• Buying positive or negative reviews

• Failing to make disclosures about insider reviews and testimonials

• Deceptively claiming that company-controlled review websites are independent

• Illegally suppressing negative reviews

• Selling and buying fake social media indicators

These rules take effect in October. Companies that violate the rules are subject to civil penalties of up to $51,744 for each violation. As such, companies that have been purchasing or posting fake positive reviews should strongly consider discontinuing the practice.

A one-star rating or a negative customer review that expresses an opinion such as “this product stinks” or “this is a lousy company” is not defamation. If a person posts a provably false statement online about a company, however, the traditional remedy is to assert a defamation claim against the person who made the post, usually in hopes of convincing them to take it down. (Requests to remove can also be made directly to the platform, but these efforts tend to have mixed results.) If the person who posted false statements is anonymous, a company can start a “John Doe” lawsuit in order to subpoena the platform or other third parties to determine the identity of the poster. All of this can take time and cost money, but a single false statement can be devastating to the online reputation of a business.

The FTC rules also state that “it is an unfair or deceptive act or practice … for anyone to use an unfounded or groundless legal threat, a physical threat, intimidation, or a public false accusation in response to a consumer review that is made with the knowledge that the accusation was false or made with reckless disregard as to its truth or falsity, in an attempt to: prevent a review or any portion thereof from being written or created, or cause a review or any portion thereof to be removed, whether or not that review or a portion thereof is replaced with other content[.]”

The rules do not prevent defamation actions, so long as they are made in good faith and grounded on evidence. In other words, before commencing a defamation action, it is important for a business to make sure it is able to show that it is acting in good faith on an honest belief, and the business will need to be prepared to present evidence and factual support for its claims.

Online reviews can be incredibly important for businesses. The new FTC rules provide some recourse for addressing false and defamatory online reviews, but the rules also largely prohibit businesses from attempting to influence, produce or fabricate online reviews. So, it is important for businesses to revisit their online review practices and ensure that they are in compliance.

V. John Ella is a defamation attorney.