Podcast - FTC Consumer Review Rule Warning Letters Target a Digital Marketplace Cornerstone

Anthony DiResta: Welcome to another podcast of Clearly Conspicuous. As we've noted in previous sessions, our goal in these podcasts is to make you succeed in this current regulatory and governmental environment, make you aware of what's going on with both the federal and state consumer protection agencies and give you practical tips for success. As always, it's a privilege to be with you today.

Today we discuss a significant development in consumer protection law: the Federal Trade Commission's recent warning letters to companies over potential violations of the consumer review rule. We'll explore what the rule is, why the FTC is now enforcing it, what the warning letters mean for businesses and consumers, and what all of this signals about the evolving regulatory landscape for online reviews and testimonials.

What Is the Consumer Review Rule?

In October of 2024, the FTC's consumer review rule took effect. This regulation focuses squarely on online consumer reviews and testimonials, a cornerstone of the digital marketplace. So let's start with the definitions.

Consumer review: The final rule defines a "consumer review" as "a consumer's evaluation, or a purported consumer's evaluation, of a product, service or business that is submitted by the consumer or purported consumer and that is published to a website or platform dedicated in whole or in part to receiving and displaying such evaluations." Therefore, the definition makes clear that this includes consumer ratings regardless of whether they include any text or narrative.

Consumer testimonial: The final rule defines a "consumer testimonial" as "an advertising or promotional message (including verbal statements, demonstrations or depictions of the name, signature, likeness or other identifying personal characteristics of an individual) that consumers are likely to believe reflects the opinions, beliefs or experiences of a consumer who has purchased, used or otherwise had experience with a product, service or a business."

Under the rule, companies must not engage in practices that are deceptive, unfair or that practically distort consumer feedback. Specifically, the rule prohibits misrepresenting whether a reviewer actually used a product or service, bars conditioning compensation or incentives on a reviewer expressing a particular sentiment — like paying for a five-star rating or rewarding positive reviews — requires disclosure when reviews come from insiders, employees or relatives, stops companies from suppressing negative reviews or manipulating review systems, and finally applies not just to reviews or a retailer's website, but also to company-controlled "independent" review platforms and social media endorsements.

So folks, why does this matter? Because consumers rely on reviews to make decisions —and fake reviews not only mislead buyers but also harm honest competitors who play by the rules.

FTC Warning Letters: The Shift from Guidance to Enforcement

Now, on December 22 of last year, 2025, the FTC took action by sending warning letters to 10 companies. Now, these letters weren't formal enforcement actions yet. Rather, they serve as notice that the FTC believes recipient companies may be violating the rule. The letters are based on a template the FTC released, informed by consumer complaints and company data. They remind companies of their obligation under the rule, they alert them that continued noncompliance can lead to formal investigations, lawsuits and civil penalties up to over $50,000 per violation, and they urge companies to review and correct their practices promptly. Importantly, the FTC did not publicly name the companies receiving these letters. But industries that rely heavily on online reviews such as e-commerce, hospitality, health and wellness, beauty and tech platforms are thought to be especially exposed.

So why now and why does it matter? This marks a critical shift. The rule has been in effect for over a year, and now we're seeing the FTC move from guidance and education to active enforcement. Warning letters are often a first step. They give companies a chance to change behavior before the FTC escalates to formal actions. Historically, many recipients comply quickly once alerted. Those that don't can face significant[ly] great legal exposure. For consumers, this could mean greater trust in the reviews they see online. For businesses, it means review practices and incentive programs must be audited to ensure they comply. Key compliance questions for businesses include: Are reviewer identities and experiences accurately represented? Are incentives tied to specific review sentiments? Are internal or family reviews disclosed as such? Are negative reviews suppressed or filtered unfairly?

Key Takeaways

There are three major takeaways from this development. First, the FTC is serious about cleaning up on online reviews and is now willing to enforce the consumer review rule. Second, warning letters are not the end; they're the beginning of heightened scrutiny. And finally, businesses should act now to review, revise and document their practices to avoid enforcement actions and penalties.

So folks, that wraps up our dive into the FTC's consumer review rule and its recent enforcement letters. In a digital world where trust is currency, genuine consumer feedback matters more than ever. If you run a business or advise one, now is the time to ensure compliance — not just to avoid penalties, but to maintain credibility with your customers.

So please stay tuned to further programs as we identify and address the key issues and developments and provide strategies for success. I wish you continued success and a meaningful day. Thank you.