New FTC rules impose severe fines on cryptocurrency influencers for fake likes and followers, and celebrity endorsements will face increased scrutiny.
The US Consumer Protection Agency has finalized guidelines to prevent fraudulent reviews, so cryptocurrency influencers who raise their social media reach with bogus followers, views, and likes risk fines.
The Federal Trade Commission (FTC) approved the new federal regulations on August 14 by a vote of 5-0 among its commissioners. The Federal Register posting of the rules will cause them to take effect sixty days later. This implies that they take effect as early as October.
Anyone who engages in the “selling or buying of fake indicators of social media influence,” such as views or followers “generated by a bot or hijacked account,” is prohibited by the regulations.
On August 14, US-based advertising attorney Rob Freund wrote on X, saying, “Everyone juicing their views, saves, plays, subs, likes, etc. through any inauthentic means violates the new rule.”
The prohibition only applies to products where the purchaser should have known or knew they were fraudulent and falsely claimed to have “influence or importance for a commercial purpose.”
The FTC has identified celebrity testimonials as one of the practices that violate the regulation, which also forbids creating or purchasing reviews that are artificial intelligence-faked from people who do not have “experience” with the good or service being marketed.
Along with new guidelines for review websites, there are no further restrictions on reviews from company insiders and the suppression of favorable and unfavorable evaluations.
Fines for breaking the new regulation might reach $50,000 for each infraction.
FTC Chair Lina Khan said, “Fake reviews not only waste people’s time and money but also pollute the marketplace and divert business away from honest competitors.”
“The final rule will protect Americans from getting cheated.”
After attempting to gain control of the fake review market for years, the FTC said in October last year that it would look for new regulations regarding phony reviews and fake boosted social metrics.
