The Federal Trade Commission's Rule on the Use of Consumer Reviews and Testimonials took effect in October 2024. It moved a set of practices that were already technically deceptive into territory where the Commission can seek civil penalties.
Most coverage framed this as a problem for companies buying reviews in bulk offshore. That is in scope, but it is not where most local service businesses are actually exposed. The realistic risk sits in a handful of ordinary habits that nobody involved thinks of as faking anything.
Here is what the rule covers, and where the ordinary-practice traps are.
What the rule prohibits
The rule addresses several distinct practices. In plain terms:
Fake and false reviews. Reviews that misrepresent the reviewer's experience, or that come from someone who does not exist or never used the product. This covers reviews written by the business, by its employees, or by anyone who never had the experience described. It also covers buying them.
Insider reviews without disclosure. Reviews or testimonials from officers, managers, employees, or their immediate relatives, where the relationship is not clearly disclosed. This is the one that catches ordinary businesses most often. Asking your team to leave a review is not automatically prohibited — presenting it as an unaffiliated customer review is.
Review suppression. Using unfounded legal threats, intimidation, or false accusations to get a negative review taken down, and presenting a review section as complete when negative reviews have been selectively removed. Curating out unflattering feedback while implying the display is representative is the issue.
Company-controlled review sites. Presenting a review site as independent when the business controls it.
Buying positive or negative reviews. Providing compensation conditioned on the review expressing a particular sentiment. Asking for a review is fine. Offering a discount for a five-star review specifically is not.
Fake social proof indicators. Selling or buying fake followers, views, or engagement, where the buyer knows they are fake and they misrepresent influence for a commercial purpose.
The FTC's own business guidance on the rule is the primary source worth reading directly, and the penalty amounts are adjusted annually.
Where local businesses actually get exposed
Almost nobody reading this is buying review farms. These are the realistic ones.
Placeholder testimonials that shipped. A web designer fills a template with invented names and results as filler, intending to swap in real ones later. Real ones never arrive. The site goes live and stays live for two years with three named businesses that do not exist.
This is the single most common version, and the intent (nobody meant to deceive anyone) does not change the analysis. Fabricated attributed endorsements are running in advertising. Check your own site today; if the testimonials came from your web designer rather than from you, assume they are placeholder until proven otherwise.
The five-star discount. "Leave us a 5-star review and get 10% off your next service." This conditions compensation on sentiment. The fix is trivial: condition it on the review, not the rating. "Leave us a review — good or bad — and get 10% off" is a different offer and a defensible one.
Reviews from the team. A new location opens with zero reviews, so the owner asks staff and family to seed a few. Understandable and very common. Under the rule, those are insider reviews and the relationship needs disclosing — which on Google, in practice, means they should not be there.
Selective display on your own site. Pulling your best reviews onto a testimonials page is normal marketing and is fine. The line is implying completeness — a widget captioned "our reviews" that is actually "our reviews above four stars" is the problem. Either display them all or make clear it is a selection.
Gating. Sending happy customers to Google and unhappy ones to a private feedback form is a widespread industry practice sold by a lot of reputation-management vendors. It suppresses negative reviews by design. Google's own policies have long prohibited it independently of the FTC rule.
AI-written reviews. A tool that drafts a review for a customer to approve occupies uncomfortable ground — if it describes an experience the customer did not have, it misrepresents. If it merely tidies their own words, it is closer to fine. Have the customer write it.
What to do this week
Audit your own testimonials. For each one, can you name the real business, and do you have written permission to quote them? If either answer is no, take it down now. A page with one verifiable case study is stronger than three that evaporate on a search — and the prospect who checks is exactly the prospect you want.
Fix the review ask. Remove any rating condition from incentives. Ask everyone, not just the ones you expect to be happy.
Kill the gate. Send everyone the same review link. Answer the negative ones publicly and well — a thoughtful response to a two-star review does more for a prospect than another five-star with no detail.
Get permission in writing. Before publishing a client's name, results, or logo, get an email saying you may. This costs one message and removes the entire question.
Check what your vendors do on your behalf. If an agency or reputation tool manages your reviews, ask specifically whether they gate, whether they incentivize on rating, and whether any testimonial on your site was written by them. You are responsible for what runs in your advertising regardless of who wrote it.
The part that is actually good news
Removing unverifiable social proof feels like losing ground. It generally is not.
Attributed proof that a prospect can independently confirm (a named client, a real case study, a public review with detail) converts better than a wall of unverifiable five-star quotes, because sophisticated buyers have learned to discount the latter entirely. The businesses that clean this up usually find that the honest version is also the version that closes.
This is general information, not legal advice. If you are unsure about your exposure, ask an attorney who handles advertising law.