Federal Trade Commission strengthening “Star Rating” enforcement

August 16, 2024/Business, Regulations/

Do you ever see companies, or maybe your competitors, with “Star Rankings” and reviews that seem better than the rest? Well, it appears that the Federal Trade Commission (FTC) has and they are doing something about it.

According to an article that I read, FTC Chair Lina Khan made the following statement, “Fake reviews not only waste people’s time and money, but also pollute the marketplace and divert business away from honest competitors. By strengthening the FTC’s toolkit to fight deceptive advertising, the final rule will protect Americans from getting cheated, put businesses that unlawfully game the system on notice, and promote markets that are fair, honest, and competitive.”

So, it is not only the death care business that the FTC is zeroing in on, but all businesses that are rated with the star ranking system. Artificial Intelligence generated reviews or offering incentives to customers in exchange for writing specific comments will be illegal and result in penalties according to the new rule that will be put into effect in about 60 days. Here is the FTC press release from August 14 announcing this action.

According to that press release, here are six items that will be prohibited when referring to Star Ratings. An explanation of each category is available from the linked FTC press release above:

Fake or False Consumer Reviews, Consumer Testimonials, and Celebrity Testimonials
Buying Positive or Negative Reviews
Insider Reviews and Consumer Testimonials
Company-Controlled Review Websites
Review Suppression
Misuse of Fake Social Media Indicators

According to another article that I read on the subject, “. . . .the new ruling allows the FTC to seek up to $51,744 per violation, but it will ultimately be left to enforcement and the courts, which can impose much lower penalties depending on the case or size of a business.”

Tom Anderson
Funeral Director Daily

Funeral Director Daily take: I don’t know if I’ve ever been duped when looking at Star Rankings (Ratings). I must admit as they have become more prevalent I have looked at them more often. . . . and I usually put belief into them. Just reading about this new ruling has now made me more skeptical. . . . . .I guess how do I know that the reviewer that wrote “Best steak I ever tasted” is not the chef or the owner of the restaurant saying that?

The same might go for funeral homes. . . . .I think policing this ruling may be difficult as I would guess that many business people will notify the FTC that their competitor has false ratings on their site. . .whether they do or not. Policing those claims may well be cause for a larger staff at FTC and more government and government expense, raising our taxes, is not something most of us want or need

On the other hand, there has to be a way to control the fairness of this ranking (rating) system and it looks like the FTC is giving that a try.

I know that this system and how a company is represented by it can make or break a company. When I served as Chairman of the Board of a large senior living conglomerate, that included health-care related facilities, we were cognizant of what our star reviews were from the general public. Many of our potential clientele had family living a distance away and relied on this system as their first-line of choice elimination when looking at facilities because they were not in our community to see for themselves. . . . .I’m guessing that might be the case with funeral homes as well.

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