The FTC offers greater control over stealth advertising

The US Federal Trade Commission (FTC) is considering measures to tighten its guidelines on counterfeit reviews and misleading marketing.

FTC endorsement guides instruct businesses that advertising using affirmations or testimonials is true, and that advertisers need to reach out to consumers and explicitly disclose unexpected material connections between sellers and supporters of an advertising product. They warn that advertisers who lie to consumers through approval or testimonials may violate FTC rules.

However, the guides have not changed since 2009, which is not designed to address the growing use of social media and product reviews as their marketing tools.

“We’re updating the guides to crack down on fake reviews and other forms of misleading marketing, and we’re warning marketers about stealth ads that target kids.” Samuel Levine is the director of the FTC Bureau of Consumer Protection.

“Whether it’s fake reviews or influential people hiding that they were paid to post, this kind of fraud makes people pay more for bad products and services and it hurts honest competitors.”

The FTC is warning social media platforms that some of their tools are insufficient for supporters, and may expose them to liability.

It clarifies that counterfeit reviews are included in the guide and adds a new policy that in order to collect, suppress, enhance, organize or edit consumer reviews, advertisers must not distort or misrepresent what consumers think of their product.

This will cover the suppression of reviews in cases such as online fashion retailer Fashion Nova, which earlier this year suppressed reviews with ratings less than four out of five and resulted in a 4.2 million fine.

And, the FTC says, tags in social media posts are covered under the guide, as are virtual influencers – computer-generated fictional characters. Finally, the micro-targeting of specific audiences will be closely scrutinized.

The FTC also proposed adding a new section to the guides, highlighting that child-directed advertising is a matter of particular concern and that children may respond differently to advertising approvals to adults.

Last year, the FTC said, it sent out more than a thousand business notices regarding counterfeit reviews and other misleading approvals. However, the sector is much less regulated in the United States than in many other countries. In the UK, for example, recently introduced rules mean that writing or hosting fake reviews can result in fines of up to 10 per cent of global turnover.