On August 14, 2024, the Federal Trade Commission (“FTC”) published its long-anticipated Final Rule on the Use of Consumer Reviews and Testimonials (“Final Rule”), marking a significant development in the regulation of online reviews and endorsements (16 CFR Part 465).
One section is labeled § 465.5 Insider Consumer Reviews and Consumer Testimonials. It discusses whether officers of a company, employees, or family members can post a review. No surprise. Family members often use the services of a business. The Federal Trade Commission says you can ask for the review but only if there’s a disclosure that the poster IS a family member. (There’s a caveat later for spontaneous reviews…)
“Hi, Jeff, it’s Mom here. Thanks for the wonderful job you did removing my meningioma. Five stars. Love you.”
I suppose that would comply. The specific language the FTC uses is below:
(c)(1) It is an unfair or deceptive act or practice and a violation of this part for an officer or manager of a business to solicit or demand a consumer review about the business or one of the products or services it sells from any of their immediate relatives or from any employee or agent of the business, or to solicit or demand that such employees or agents seek such reviews from their relatives, when:
(i) the solicitation or demand results in an officer’s or manager’s immediate relatives, an employee or agent, or the immediate relatives of an employee or agent writing or creating such a review without a disclosure of the reviewer’s material relationship to the business, and
(ii) the officer or manager:
(a) encouraged the prospective reviewer not to make such a disclosure,
(b) did not instruct that prospective reviewers disclose clearly and conspicuously their relationship to the business, or
(c) knew or should have known that such a review appeared without such a disclosure and failed to take remedial steps.
(2) However, paragraph (c)(1) of this section does not apply to generalized solicitations to purchasers for them to post reviews about their experiences with the product, service, or business.
The Final Rule evolved. Early iterations forbade reviews (sans disclosure) by “relatives”, not just “immediate relatives.” The Commission added a definition of an “immediate relative,” which clarifies that the term refers to a spouse, parent, child, or sibling.
Two commenters suggested that the Commission define the term “relative.” A comment from a review platform said that a plain reading of “relative” could cover “an extremely broad range of people” and “is likely to extend to persons who may not be biased since they are in reality not close to the business.” The commenter suggested that the prohibition in § 465.5(c) be limited to close relatives such as immediate family members. A comment from a business organization said that the term “relative” is too vague and that “[i]t is unclear whether the rule applies to third cousins, the spouses of a stepbrother’s child from a previous marriage, or friends that are considered family.” The commenter continued that “[l]arge companies creating monitoring programs for testimonials need some clarity about what relatives will be captured under the Rule.”
Regarding disclosing a review is “an employee”, the FTC believed it was easy, peazy.
The Commission believes it is not difficult to comply with the rule’s disclosure requirements in the social media context. Depending upon their wording and appearance, hashtags can be clear and conspicuous for purposes of the rule. In a social media post promoting a brand, it might be sufficient to prominently disclose an employee relationship via a hashtag beginning with the brand name and followed by the word “employee.”
And for owners or relatives of owners:
Because the only provision for which the definition is relevant is § 465.5, which addresses the failure to disclose insider relationships, the disclosure could be as simple as the testimonialist describing a product as “my company’s” or “my wife’s company’s.”
Employees can spontaneously review the company. But the owner, officer or manager cannot solicit such reviews unless the employee discloses they are indeed an employee.
So, Mom, if you were satisfied with the meningioma surgery I performed, I’m good whether or not you post a review. No pressure.
At the end of the day, I’m not sure how enforceable this will be. Anyway, the new rules are here.
What do you think?
