The FTC banned fake, deceptive reviews. Here’s what it means for contractors

Contractors can’t offer discounts, gift cards, or other perks in exchange for positive online reviews anymore, according to a Federal Trade Commission rule that took effect in late 2024.

The big picture: In recent years, businesses of all types have been put under a microscope, and even fined millions, for deceptive review practices.

• Online rental company Roomster was fined $1.6 million in 2023 for using thousands of fake reviews to entice customers to rent apartments that didn’t exist. 
• “When companies use fake reviews, consumers get misled and honest businesses lose out,” wrote FTC Chair Lina Khan. 

Details: In October 2024, the FTC officially banned fake reviews — those written by your neighbor who’s not an actual customer, for instance — and the purchase of positive reviews, along with a few similar practices: 

• Opaqueness. Company employees and family members can write reviews, but they have to make their connection to the company clear. 
• Review suppression: Companies can’t intimidate or threaten anyone to prevent or remove a negative review.
• Fake socials: Buying social media followers on platforms like Facebook and Instagram is also banned.
• Full breakdown

Of note: Since “Leave us a 5-star review and get 10 percent off” is now banned, any similar verbiage within contractors’ automated review systems needs to be updated. 

Why it matters: The rule gives the FTC the authority to fine companies $50,000 per violation.

Zoom in: Google’s technology is getting even better at detecting phony reviews, considering factors like “posting patterns and reviewer credibility,” notes Adam Heitzman, co-founder of SEO company HigherVisibility.

• “Businesses that have relied heavily on review quantity over quality could see significant changes in their search visibility,” he says, adding, “The local map pack will become even more competitive.”

The bottom line: The FTC’s policy is more than just another rule to follow, but rather, Heitzman puts it, an “opportunity to rebuild customer trust in online reviews.”

• “The future of local SEO will increasingly reward businesses that prioritize authentic customer experiences,” he notes, “over artificial metrics.”
• Google didn’t respond to a request for comment.