FTC Cracks Down on False and Misleading Customer Reviews

The Federal Trade Commission has reached an agreement contained in an order that, if adopted, will stop the automobile shipment broker AmeriFreight from publishing biased customer reviews to mislead future customers.

The FTC’s complaint alleges that AmeriFreight purposefully deceives potential customers by providing positive reviews from past customers that were given a discount or paid to write their review. Title 15, Section 45 of the U.S. Code gives the FTC authority to bring actions against entities that “use[] unfair methods of competition in or affecting commerce and unfair or deceptive acts or practices in or affecting commerce.”[1] The same section allows the FTC to issue an injunctive order to stop the unfair practices, but must allow 30 days for a chance for the defendant party to be heard. The Code of Federal Regulations defines endorsements as “any advertising message (including verbal statements, demonstrations, or depictions of the name, signature, likeness or other identifying personal characteristics of an individual or the name or seal of an organization) that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party.”[2] Misleading endorsements are actionable under 15 U.S.C. § 45.[3]

The complaint specifically describes the misleading endorsements. It alleges that AmeriFreight would provide $50 discounts for customers who wrote positive reviews, and would charge $50 extra for those who did not. Further, AmeriFreight would remind customers after delivery of their automobiles to write a review, and offered a $100 cash bonus to the best review of the month. Most egregiously, AmeriFreight would label its reviews as unbiased and would feature the reviews prominently on its website and in its other advertising material.

After receiving the complaint, AmeriFreight and the FTC agreed to a settlement that is encompassed in the proposed order. If adopted, the order will enjoin AmeriFreight from continuing its deceitful practices, and will force the company to keep records of its customer reviews—and provide them to the FTC if requested—for five years. This also includes the option for the FTC to inspect AmeriFreight’s operations. The order further requires that AmeriFreight deliver a copy of the order to all future directors and employees of the company for the next ten years. Finally, the order will dissolve 20 years after its adoption. A violation of the order allows the FTC to bring a suit in federal court against AmeriFreight.

This case marks the first time the FTC has brought an action against a company for misleading customers by misrepresenting online reviews. It stands as a warning to other companies that paying customers to write positive reviews without disclosing that payment to potential customers will not be tolerated.

[1] 15 U.S.C. § 45(a)(2).

[2] 16 C.F.R. § 255(b).

[3] Id. at § 255(a).

The FTC’s Endorsement and Testimonial Rules: The Regulatory Framework

The FTC’s authority to police fake and misleading reviews flows primarily from two sources: Section 5 of the FTC Act, 15 U.S.C. § 45, which prohibits unfair or deceptive acts or practices, and the FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising, codified at 16 C.F.R. Part 255. These Guides were substantially updated in 2023 to address the modern landscape of online reviews, influencer marketing, and consumer-generated content.

The Guides provide that when a material connection exists between an endorser and the company whose product is being reviewed—such as payment, free products, discounts, or any other form of compensation—that connection must be clearly and conspicuously disclosed. The disclosure requirement is not satisfied by burying a note in terms and conditions, using ambiguous language, or placing it where consumers are unlikely to see it. The FTC expects disclosures that are hard to miss and easy to understand.

What Constitutes a “False” or “Misleading” Review

A review is false or misleading under FTC standards when it creates a deceptive impression about the nature of consumer opinion. This encompasses several distinct practices:

• Undisclosed incentivized reviews: Soliciting reviews in exchange for compensation—cash, discounts, free products, sweepstakes entries—without requiring the reviewer to disclose the incentive. The AmeriFreight case is a textbook example: customers were given financial incentives to write positive reviews, and the reviews were presented as the unbiased opinions of ordinary consumers.
• Fake reviews generated by the company itself: Creating or purchasing fabricated reviews written by individuals who have no actual experience with the product or service.
• Suppression of negative reviews: Selectively displaying only positive reviews while filtering out or suppressing negative ones can constitute a deceptive practice when it creates a materially misleading overall impression of consumer opinion.
• Review hijacking: Using a product or service listing that has accumulated reviews for a different product—a practice that deceives consumers who rely on those reviews when evaluating the current offering.

The FTC’s 2024 Rule on Fake Reviews

The FTC significantly escalated its enforcement posture in 2024 by issuing a final rule specifically targeting fake reviews and testimonials. 16 C.F.R. Part 465. The rule, which took effect in October 2024, explicitly prohibits: (1) creating, buying, or disseminating fake consumer reviews; (2) purchasing positive reviews or penalizing consumers who give negative ones; (3) insider reviews—reviews by company insiders without clear disclosure; (4) company-controlled review websites that fail to disclose the company’s financial interest; and (5) review suppression.

Critically, the 2024 rule allows the FTC to seek civil penalties against violators without first obtaining a prior cease-and-desist order—a significant departure from the prior enforcement model. Civil penalties under Section 5(m) of the FTC Act can reach $50,120 per violation. In the context of a national review manipulation campaign involving thousands of reviews, the exposure can be substantial.

Practical Compliance Guidance for Businesses

Businesses that collect, display, or solicit customer reviews should implement compliance policies that address the following:

• Disclosure requirements: Any review that was incentivized—even with a modest discount or a chance to win a prize—must include a clear disclosure of the material connection. The disclosure must be placed where consumers will see it before relying on the review.
• No selective suppression: Companies should not implement systems that solicit reviews from satisfied customers while steering dissatisfied customers away from public review platforms. These “review gating” practices are specifically addressed in the FTC’s 2024 rule.
• Employee and affiliate reviews: Reviews by employees, company officers, and affiliates must clearly disclose the reviewer’s relationship to the company. Undisclosed insider reviews violate the Endorsement Guides regardless of whether they accurately reflect the reviewer’s honest opinion.
• Third-party review platforms: Businesses that aggregate or republish reviews from third-party platforms should ensure they are not curating only favorable reviews. Displaying a cherry-picked subset of reviews can itself be a deceptive practice.

If your business has received an FTC inquiry related to online reviews, advertising practices, or endorsements, or if you want to audit your current review solicitation practices for compliance, Revision Legal’s attorneys can help. Contact us through the forms on this page or call 855-473-8474.

State Law Parallels: State Consumer Protection Enforcement

Beyond FTC enforcement, businesses that engage in fake or manipulated review practices also face exposure under state consumer protection statutes. Every state has some form of unfair and deceptive acts or practices (UDAP) law that mirrors the FTC Act. State attorneys general have the authority to bring enforcement actions under these statutes, and in many states private citizens may pursue individual or class action claims for deceptive practices without needing to establish individual reliance—a significant departure from common law fraud requirements.

Michigan’s Consumer Protection Act, MCL 445.901 et seq., prohibits unfair, unconscionable, or deceptive methods, acts, or practices in the conduct of trade or commerce and allows for individual damages of $250 or actual damages, whichever is greater. California’s Consumers Legal Remedies Act and Unfair Competition Law have been used by private plaintiffs to challenge manipulated review practices. New York’s Executive Law § 63(12) authorizes the Attorney General to seek restitution and injunctive relief for repeated or persistent fraud or illegality. Businesses with national customer bases face exposure across multiple state regimes simultaneously. A compliance program that addresses FTC requirements but ignores state-law parallels is incomplete.