By Alvin J. Lorman, AAHP Counsel
The Federal Trade Commission (FTC) has announced that it is moving forward with a proposed Trade Regulation Rule that is intended to prevent fake, false, or misleading consumer product reviews or testimonials. In the Federal Register of July 31, 2023 (available here), FTC followed up on a prior Advanced Notice of Proposed Rulemaking and specified the specific language it is proposing to adopt.
It appears that the main purpose of the proposed rule is to permit FTC to impose consumer redress requirements on violators of the rule. While FTC has previously required financial redress to consumers, a recent Supreme Court decision that held that FTC could not impose financial redress unless it followed certain specific enforcement pathways. If adopted by FTC, a Trade Regulation Rule would permit imposition of consumer financial redress in a manner consistent with the Supreme Court holding. An FTC enforcement action based on a claim of unfair or deceptive acts or practices permits the respondent to argue that the act or practice was not unfair or deceptive. The only issue in an action to enforce a claimed violation of a Trade Regulation Rule is whether or not the respondent committed the specified offense, not whether the act itself was unfair or deceptive.
The proposed rule would outlaw a number of specific actions, including:
- Fake or false consumer reviews, consumer testimonials, or celebrity testimonials;
- Consumer review repurposing;
- Buying positive or negative consumer reviews;
- Insider consumer reviews and consumer testimonials lacking adequate disclosure;
- Company-controlled review websites or entities that claim to be independent
- Review suppression; and
- Misuse of fake indicators of social media influence.
FTC is accepting comments on the proposed rule and its potential impact on small businesses until Sept. 29, 2023. Because the proposed rule does not impact homeopathic products in any unique manner, AAHP is not planning to submit comments.