Have you ever felt frustrated when the online reviews for a product didn’t match your actual experience? It’s no wonder, considering that the National Bureau of Economic Research revealed last year that fake reviews cost consumers about $0.12 for every dollar they spend. With an average salary of around $63,000, this translates to roughly $7,560 lost annually per person due to fraudulent reviews and poor-quality products and services. Time spent sifting through misleading reviews, returning products, and dealing with complaints only add to the frustration. Misleading online reviews have become an all-too-familiar, and far-too-costly issue in the digital marketplace.

In a bid to make the internet a better place for consumers and honest businesses last week, the Federal Trade Commission issued their final ruling on fake reviews and testimonials. The comprehensive 163-page 16 CFR Part 465: Trade Regulation Rule on the Use of Consumer Reviews and Testimonials (Final Rule) introduces several new compliance requirements for businesses and puts some teeth into Section 5 of the FTC Act’s prohibition on unfair or deceptive practices. Understanding these key points will help small business owners adapt to the new regulations, avoid penalties, and enhance their review management practices.

We know you’re striving to be the best business you can be. Here are our top takeaways and actionable tips to help you navigate these changes and ensure you don’t stray from the digital media straight and narrow.

#1 Takeaway: Small Compliance Adjustments, Big Peace of Mind

If you weren’t already in compliance with Section 5 of the FTC Act, it may cost you a little to get there, but for most honest businesses it won’t be overly burdensome. In Table 3.1, the FTC estimates that larger businesses may need to spend up to $560.64 in about 8 hours of compliance activities. For smaller business, though, they don’t anticipate more than an hour to get the job done at $33.48.

That said, the risk of significant civil penalties for non-compliance is high. Civil penalties apply if a business “knew or should have known” about their deceptive review practices. In other words, ethical marketers don’t just accidentally end up in a purchasing agreement with online brokers for fake reviews. If you don’t think you’re doing anything illegal or sketchy, chances are good you’re not.

Still, you may want to document your current processes and consider investing in a legal consultation to ensure that your compliance program is robust and fully up to date. You can read more on that in sections § 465.2(a), § 465.2(d)(1), and § 465.5. Just a few small compliance changes can promote honesty and transparency, resulting in more reliable reviews and better customer relationships.

#2 Takeaway: Strengthen Review Acquisition Practices for Compliance and Trust

Is that great new customer review on your website actually from one of your employees? Were they paid for their review, so long as what they wrote was positive? Maybe a review was for a popular product and you repurposed it for another that didn’t have a review yet? Or you hid a bad review? These once-murky practices have become a more stark black-and-white, with the FTC cracking down on transparency in reviews. From now on, you’ll need to clearly disclose any material connections or incentives. Any incentives that you give must also be for honest opinions only, of course.

Take some time to update your review acquisition strategies and policies. Ensure that any incentives offered are based on genuine customer experiences, and keep detailed records of how these reviews were obtained. Be transparent by clearly disclosing any incentivized or internal reviews, and double-check that all of your reviews correspond to the correct product. These practices not only meet regulatory expectations but also help build consumer trust. For further details, refer to sections § 465.2(b), § 465.2(d)(1), § 465.2(d)(2), § 465.2(c), and § 465.5. By using these strategies, you can safeguard your business from potential compliance issues, but it’s also important to stay vigilant for risks posed by employees or third-party platforms, too.

#3. The Internet is a Big Place, Employees Go Rogue Sometimes on Third-Party Sites, and Free Speech is a Real Thing, So What Do I Do About All of That?

Businesses aren’t liable for unsolicited posts, but if your employee goes rogue and procures fake followers for your social media account on your behalf, the “knew or should have know” standard will apply. While third-party platforms are generally exempt from liability (unless they purposefully create or procure fake reviews, of course), these businesses must ensure their review practices comply with FTC rules. They are also expected to help combat fake reviews.

Administer training and put internal controls in place to mitigate risks from rogue employees. Pay close attention for red flags like a sudden spike in reviews with similar wording or phrasing, new or inactive account reviews, or reviews coming from geographic locations where you don’t have a customer base, for example. Use third-party review platforms responsibly. Ensure that your business isn’t engaging in deceptive practices and that reviews managed through these platforms adhere to FTC regulations. Work with platforms to understand their role in review management and compliance. Sections § 465.2(d)(2), § 465.2(b), § 465.2(c) have more information.

Navigating the New Regulatory Landscape for a Fairer Online Marketplace

Overall, this rule should make the online marketplace better for both consumers struggling to find quality products and services and for the honest businesses who couldn’t be heard for all the fraudulent noise in the way. There’s plenty to appreciate about a more trustworthy online experience for everyone.

Use the tips from these top 3 takeaways to help ensure compliance and protect your business from potential penalties. Investing in compliance planning, revising your review collection and posting strategies, enhancing your transparency, and enacting robust review management processes will all go a long way to helping you navigate the new regulatory landscape.

Make it a great week online, everyone!