The FTC rule on fake reviews: what contractors must know

Why the FTC acted, and why contractors should care

Reviews carry real weight with buyers. In a Pew Research Center survey, 46% of Americans said the availability of customer ratings and reviews helps 'a lot' to make consumers feel confident about their purchases, nearly double the 25% who said the same of government regulations^[3]. When people rely on reviews that much, fake ones distort competition, and honest contractors lose jobs to companies that game their profiles.

In August 2024 the Federal Trade Commission announced a final rule banning fake reviews and testimonials^[2]. The rule took effect on October 21, 2024^[1]. It is a federal rule, so it applies to an HVAC company in Phoenix in the same way as to a national retailer. It also matters because many home service businesses outsource reviews to marketing agencies; what the agency does on your behalf can become your problem.

This article summarizes the rule for owners and managers. It is not legal advice; for a specific situation, talk to an attorney.

What the rule prohibits

The FTC's press release states that the rule bans the sale or purchase of fake reviews, including AI-generated fake reviews^[2]. It prohibits businesses from offering compensation or incentives conditioned on a review expressing a particular sentiment^[2]. It bars businesses from using unfounded legal threats to suppress negative reviews, and lets the FTC seek civil penalties against knowing violators^[2].

Gray areas contractors ask about

Several common practices sit near the lines. The FTC's question-and-answer guidance clarifies most of them.

• Incentives for any review: the rule bans incentives tied to a sentiment. Google's own policy goes further and bans review incentives altogether, so for Google reviews the practical answer is no incentives at all.
• Asking only satisfied customers: the FTC says the rule does not contain a specific prohibition against this, but warns the practice could still violate the FTC Act^[1]. Its endorsement guidance says asking only customers you expect to be happy would be misleading if it skews how favorable reviews are^[4].
• Family and staff reviews: relatives of a small business owner can post reviews only if they clearly disclose the relationship^[1].
• Asking customers to change a negative review: FTC guidance warns that asking customers to change or delete negative reviews could mislead readers^[4].
• Organizing reviews on your own website: the FTC says organizing reviews is not suppressing them^[1], but hiding or deleting negative ones because they are negative can be.
• Replying to a negative review: a reply is fine. The FTC says a response should not use physical threats or intimidation to get the review removed or changed^[1].

Who is responsible when an agency or employee breaks the rule

The rule targets anyone who writes, buys, sells or procures fake reviews, and the business that benefits is usually in the frame. If you pay an agency for a 'reputation package' and it posts fake reviews, telling regulators you did not know the details is a weak defense, especially if the contract promised a number of five-star reviews each month.

1. 01

   Read every marketing contract

   Look for promises of review counts or ratings, and any clause allowing the vendor to post content under your name.

2. 02

   Add a compliance clause

   Require vendors to follow the FTC rule and Google's policies, and to never write, buy or post reviews for you.

3. 03

   Write a staff policy

   Employees must not review the company, competitors or vendors without disclosure, and must never ask customers for a particular rating.

4. 04

   Check your incentives

   Remove any reward, raffle or discount linked to reviews, including old ones still printed on cards or invoices.

5. 05

   Train on responses

   Managers who reply to reviews must not threaten, accuse without evidence or offer refunds in exchange for removal.

6. 06

   Keep records

   Save copies of review request templates and the dates they were used, so you can show that every customer got the same request.

Example: auditing a fictional roofing company

Example: a fictional roofing company with two offices runs a quick audit. It finds three issues. Its review cards promise a 'free gutter cleaning for every five-star review'. Its marketing agency's contract includes 'up to 20 new reviews per month guaranteed'. And its post-job survey sends customers who score nine or ten to Google and everyone else to a private feedback form.

1. The cards are reprinted with a plain request and no reward.
2. The agency contract is amended to remove the guarantee and add a compliance clause; the owner asks for a list of everything the agency has posted.
3. The survey is changed so every customer receives the same review link, whatever their score, and low scores also trigger a call from a manager.
4. The owner writes a one-page review policy and has every office manager sign it.

Review counts grow more slowly for a couple of months, then settle at a steady rate. The company now has a profile it can defend, and its reviews look like what readers expect: mostly positive with an occasional honest complaint and a professional reply.

A compliance checklist for owners

• Same review request to every customer, with no rating suggested.
• No incentives of any kind for Google reviews.
• Staff and relatives do not review the company, or clearly disclose the relationship where a platform allows it.
• No paid or agency-written reviews, and no purchased followers or views.
• No threats, legal or otherwise, over honest negative reviews.
• Negative reviews stay visible on your own website if you display reviews there.
• A named person checks this list each quarter.

Most of this list is simply good practice. Our guides on getting more Google reviews and responding to negative reviews show how to grow and manage reviews inside these lines.

How the rule fits with platform policies and state law

The FTC rule sets a federal floor. Review platforms often go further. Google's Maps content policy, for example, bans incentives for any review and forbids selectively soliciting positive reviews, regardless of whether a sentiment is required. Breaking a platform policy will not by itself bring a federal penalty, but it can get reviews removed or a profile suspended, which for a local contractor can be just as damaging.

States add their own layer. Many state consumer protection laws treat deceptive advertising, including fake testimonials, as an unfair practice, and state attorneys general bring cases under them. Some industries and licensing boards also have advertising rules. If you operate in several states, ask your attorney whether any of them add requirements on testimonials or endorsements beyond the federal rule.

The practical result is that the strictest rule usually wins. A review program built to satisfy Google's policy, with no incentives, no gating and no insider reviews, will also sit comfortably inside the FTC rule.

If you find a problem in your own history

Many owners discover old practices only when they read about the rule: a raffle for reviewers two years ago, reviews a former marketing agency posted, or staff who reviewed the company from personal accounts. Do not panic, and do not start deleting things at random.

1. Stop the practice immediately and write down when it started and stopped.
2. List the reviews you know or suspect are fake or undisclosed insider reviews.
3. Ask staff who posted reviews to remove them or, where allowed, add a clear disclosure.
4. Ask any agency for a full account of what it posted, and end the relationship if it will not provide one.
5. Talk to an attorney if the practice was large or recent, or if you receive any inquiry from a regulator.

Then rebuild with honest requests to every customer. A profile with fewer, real reviews is worth more than a large one you cannot defend.