FTC's Fake Reviews Crackdown: The Travel Impact

14.08.2024 - 23:11 / skift.com / Sean Oneill

The U.S. Federal Trade Commission announced a rule Wednesday aiming to punish businesses for buying or selling fake reviews and endorsements – and there are plenty of implications for the travel industry.

It’s been a long-running problem in travel. It’s been an open secret for more than a decade that many hoteliers post fake reviews, often by hiring third parties. The aim is either to make competitor properties look worse or improve their own online ratings. Fake reviews can be created and posted by businesses themselves or by hiring services for as little as a few dollars per review. AI tools promise to turbocharge the practice.

But this new rule enables the FTC to seek civil penalties of up to $51,744 per violation, and the agency will start enforcing the rule within roughly two months.

The rule is targeted at a wide range of services – think restaurants – but the ruling will affect online review sites and travel agencies, hotel and short-term rental lodging providers, social media influencers, and other review generators.

The agency’s new rule prohibits the creation, purchase, or sale of fake reviews, including those generated by AI or individuals without genuine experience.

Travel agencies, travel booking platforms, travel price-comparison services, and blogs that fail to take reasonable steps to police fake reviews and endorsements could be held accountable.

While most companies may embrace the goal of protecting consumers from sleight of hand, some will face a burden in trying to police reviews on their digital sites and apps. Rogue digital marketers constantly test new ways to game the system. And drawing the line between genuine and manufactured sentiment is tricky.

“It is unclear how far-reaching this responsibility (and resulting civil penalties for violation) will be – e.g., a fake review gets posted to a platform and then linked/posted at service providers website, etc.,” said Christopher Anderson, a professor at Cornell’s SC Johnson College of Business via email.

However, the Travel Tech Association, which represents online travel agencies and other intermediaries, said that the agency had written the law in a way that properly targeted bad actors. The penalties aren’t singling out the tech platforms that carry content and that make a good faith effort to vet their content, it said.

“Travel Tech welcomes the adoption of the Commission’s proposed rules that appropriately target bad actors without significantly burdening honest businesses and provide benefits to consumers and honest competitors.”

Social media influencers, bloggers, and other people who are paid for endorsements may also be at legal risk if they don’t follow ethical practices.

The FTC has banned the practice of providing