Updated October 2026: We updated this post to cover the FTC’s Rule on the Use of Consumer Reviews and Testimonials (16 C.F.R. Part 465), effective October 21, 2024, which bans fake reviews and testimonials, including those attributed to people who do not exist, and allows civil penalties for knowing violations, and to correct how the post described FTC penalties and earlier enforcement actions.
The FTC Endorsement Guides and Fake Personas
The Federal Trade Commission’s Guides Concerning the Use of Endorsements and Testimonials in Advertising, 16 C.F.R. Part 255, are a primary federal framework governing affiliate and influencer marketing. The 2023 revised Guides, the first major revision since 2009, expanded the disclosure guidance and make clear that endorsers can include virtual influencers and other personas that are not real people.
Under the Guides, a ‘material connection’ between an endorser and a marketer must be clearly and conspicuously disclosed. A material connection includes any financial relationship, including affiliate commissions, as well as any employment, family, or close personal relationship. When the ‘endorser’ is a fictional persona created and operated by the brand itself, the entire endorsement relationship is a material connection, and the audience has no way to evaluate the independence (or lack thereof) of the recommendation.
The Guides themselves are the FTC’s interpretation of Section 5 of the FTC Act. They are not binding regulations, and violating them does not, by itself, trigger civil penalties. That changed in an important way in 2024.
The FTC’s Consumer Reviews and Testimonials Rule
The FTC’s Rule on the Use of Consumer Reviews and Testimonials, 16 C.F.R. Part 465, took effect on October 21, 2024. Unlike the Endorsement Guides, it is a binding trade regulation rule. Among other things, the rule prohibits businesses from creating, selling, or disseminating fake consumer reviews and testimonials, including reviews or testimonials attributed to people who do not exist and reviews by people who did not have actual experience with the business or its products. The rule also addresses undisclosed reviews by company insiders, business-controlled review websites that misrepresent themselves as independent, review suppression, and the buying and selling of fake social media indicators such as followers and views.
The rule matters for fake-persona marketing for two reasons. First, a persona that does not exist cannot give a genuine testimonial. Second, the rule allows the FTC to seek civil penalties against those who violate it knowingly, which was not available for a first-time violation of Section 5 based on the Endorsement Guides alone. Said another way, a brand that builds a fictional reviewer to praise its own products now faces penalty exposure, not just an order to stop.
FTC Enforcement: What the Cases Tell Us
The FTC has brought numerous enforcement actions against deceptive endorsement schemes. In FTC v. Devumi, LLC (2019), the FTC settled with a company that it alleged sold fake social media followers and engagement, alleging that creating the false impression of social proof violated Section 5 of the FTC Act. In In re Sunday Riley Modern Skincare, LLC (FTC 2020), the agency entered a consent order against a cosmetics company that it alleged had instructed employees to post fake reviews.
Fake-persona affiliate marketing sits squarely within the same enforcement framework. The FTC’s position is clear: the agency will treat as deceptive any advertisement that creates a false impression of independent endorsement. Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), prohibits ‘unfair or deceptive acts or practices in or affecting commerce.’ A Section 5 violation alone typically results in a cease-and-desist or consent order and, in some cases, consumer redress. Civil penalties, which exceed $50,000 per violation (adjusted annually for inflation), are available when conduct violates an FTC rule, such as the Consumer Reviews and Testimonials Rule, or an existing FTC order. Civil investigative demands, consent orders, and structural injunctions are also common remedies.
State-Law Deceptive Trade Practice Claims
Beyond federal FTC enforcement, fake-persona affiliate marketing exposes businesses to liability under state consumer protection statutes. Nearly every state has enacted a Little FTC Act or a Uniform Deceptive Trade Practices Act (UDTPA) equivalent. Many of these statutes, unlike the FTC Act, create a private right of action for injured consumers and competitors, including statutory damages and attorney’s fees.
- California: The California Consumer Legal Remedies Act (CLRA), Civil Code § 1770, and the Unfair Competition Law (UCL), Bus. & Prof. Code § 17200, both prohibit deceptive representations about the nature or sponsorship of goods or services. Violations can result in class actions.
- New York: General Business Law § 349 prohibits deceptive acts or practices and allows consumers to recover actual damages or $50, whichever is greater, plus attorney’s fees. No proof of reliance is required.
- Michigan: The Michigan Consumer Protection Act, MCL § 445.901 et seq., similarly prohibits deceptive trade practices and provides for actual or statutory damages.
Platform Terms of Service Liability
Fake-persona affiliate marketing also runs afoul of the terms of service of virtually every major digital platform, including Amazon, Meta, Google, TikTok, and YouTube. Platform bans, account terminations, and clawback of affiliate commissions are common consequences. Some platforms have filed civil suits against fake-persona operators under the Computer Fraud and Abuse Act (CFAA), 18 U.S.C. § 1030, alleging that creating fake accounts violates the platform’s terms of service in a manner that constitutes unauthorized access to a computer system. After the Supreme Court’s decision in Van Buren v. United States, 593 U.S. 374 (2021), which read the CFAA’s “exceeds authorized access” language narrowly, CFAA claims based only on terms of service violations face more difficulty, but platforms continue to pursue breach of contract and other claims.
Structuring a Compliant Affiliate Program
A compliant affiliate or influencer program requires clear disclosure at every touchpoint. Key elements include:
- A written affiliate agreement that obligates affiliates to disclose the material connection clearly and conspicuously in every post, review, or advertisement.
- Specific disclosure language that the FTC will accept: ‘#ad,’ ‘#sponsored,’ or ‘I received compensation for this post’ are acceptable; ‘#partner’ buried in a list of hashtags is not.
- A monitoring program to audit affiliate content and terminate affiliates who violate disclosure requirements.
- A prohibition on fake-persona operations and fake reviews in the affiliate agreement, including representations that all affiliate accounts represent real persons or entities and that any reviews or testimonials reflect actual experience.
- Training for any employees or contractors who manage the affiliate program on the FTC Endorsement Guides and the Consumer Reviews and Testimonials Rule.
If your business has run or is considering a persona-based marketing campaign, speak with an attorney before you launch. Revision Legal’s internet law attorneys advise brands on FTC compliance, affiliate program structuring, and defense of FTC investigations. Contact us at revisionlegal.com/contact or visit our Internet Law practice page.
The answer is: probably. The specific facts will determine if it is illegal and/or unethical to use fake personas and non-existent influencers to engage in affiliate marketing. It also depends on which party has created the fake persona/false influencer.
The general legal principles are as follows:
- Deceptive business practices are illegal
- False advertising is illegal
- Fake consumer reviews and testimonials, including those attributed to people who do not exist, are prohibited by the FTC’s Consumer Reviews and Testimonials Rule
- The use of frauds and deceits to deprive people of their money, or other things of value, is a form of theft under the laws of every State
With affiliate marketing, a provider of goods and/or services contracts with an “affiliate,” who could be a person or a company, to promote the goods/services. Often, the arrangement is a pay-per-sale or pay-per-lead. Let’s look at a hypothetical example involving a person (let’s call her Patty) who operates a gardening website. A company that sells garden tools and accessories contracts with Patty, the owner of the website, to promote certain garden tools. Let’s call the company “GardenCo.” Patty might use the tools in a video or discuss the tools in an article. Let’s assume that Patty has a link on her webpage that allows a reader/viewer to go to GardenCo’s website to buy the tools. Generally, Patty will be paid a commission on that sale. So far, so good.
However, there is a legal issue if Patty does not disclose to her viewers/readers that she gets a commission from GardenCo for any sales that result from using her link. The Federal Trade Commission has explicitly said that failing to disclose that one is promoting a product/service in exchange for money or other consideration can be deceptive advertising.
Putting that aside, let’s consider the circumstances where Patty and her website are completely fake. “Patty” is not real; all images and video of “Patty” are computer generated, and, likewise, the content of the website is entirely generated by an AI computer program. There are two possibilities here. First, some third party created and now controls “Patty” and her website and contracted with GardenCo without disclosing the fake persona and CGI-created website content. Second, GardenCo created and controls “Patty” and her website. In the first case, that third party has committed fraud and deception against GardenCo and viewers/readers. In the second case, GardenCo has committed fraud and deception.
Let’s focus on the second case, where GardenCo created and controls “Patty’s” website. The fraud and deception lie in the fact that consumers perceive “Patty” as independent and separate from GardenCo. As such, if “Patty” praises and recommends the garden tools, that praise and those recommendations are seen as personal and are more persuasive. By contrast, if GardenCo praises its own tools, that is to be expected because, of course, any business will praise its own products and services. The fraud in this example is also well-planned, pervasive, and long-running. This is precisely what would be called a “scheme to deceive.” It is also the conduct the Consumer Reviews and Testimonials Rule targets: a testimonial from a person who does not exist, with no actual experience of the product, published on a site that a business controls while presenting it as independent. If GardenCo knew what it was doing, and it plainly would, it faces potential civil penalties in addition to the other remedies described above.
Of course, the legal and ethical issues mostly vanish if GardenCo is up-front about “Patty” and her website. Most issues are resolved by a clear notice displayed prominently on “Patty’s” website saying: “This site is owned and operated by GardenCo.” Moreover, the fact that “Patty” is fake could be turned into a marketing opportunity with the phrase: “Patty is our wonderful state-of-the-art CGI spokesperson. Enjoy the show.” GardenCo should still avoid presenting “Patty’s” opinions as the experiences of a real customer, because a disclosed brand spokesperson is not the same thing as a consumer review.
Contact the False Advertising and Deceptive Business Practices Attorneys at Revision Legal
For more information, contact the experienced FTC Compliance Lawyers at Revision Legal. You can contact us through the form on this page or call (855) 473-8474.
