Amazon, Walmart, and hundreds more companies were warned by regulators that they could face steep fines if they use fake reviews or other deceptive endorsements

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  • The Federal Trade Commission is cracking down on misleading endorsements like fake online reviews.
  • The agency warned more than 700 companies, including Amazon, Walmart, and Target, about the issue.
  • Companies could have to pay up to $US43,792 ($AU59,027) per violation if caught using deceptive endorsements.

The Federal Trade Commission is cracking down on endorsements that deceive shoppers.

The agency said in a press release last week that it has sent notices to more than 700 companies, warning that they could face steep fines for using misleading endorsements like fake reviews.

“The rise of social media has blurred the line between authentic content and advertising, leading to an explosion in deceptive endorsements across the marketplace,” the release says. “Consequently, the FTC is now using its Penalty Offense Authority to remind advertisers of the law and deter them from breaking it.”

The list of companies that were sent the notice includes Apple, Amazon, Facebook, Walmart, Target, Tesla, and more. The FTC notes, however, that “a recipient’s presence on this list does not in any way suggest that it has engaged in deceptive or unfair conduct” and that letters were sent to “an array of large companies, top advertisers, leading retailers, top consumer product companies, and major advertising agencies.”

The letter puts the companies on notice that they could face fines of up to $US43,792 ($AU59,027) per violation if they use practices that the FTC has deemed unfair or deceptive in previous administrative cases.

“Fake reviews and other forms of deceptive endorsements cheat consumers and undercut honest businesses,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection, in the release. “Advertisers will pay a price if they engage in these deceptive practices.”

According to the release, these practices include things like “falsely claiming an endorsement by a third party; misrepresenting whether an endorser is an actual, current, or recent user; using an endorsement to make deceptive performance claims; failing to disclose an unexpected material connection with an endorser; and misrepresenting that the experience of endorsers represents consumers’ typical or ordinary experience.”

Earlier this year, the UK consumer rights group found that websites were selling fake reviews to Amazon sellers hoping to improve their products’ ratings. In June, Britain’s competition regulator said it had opened an investigation into whether Amazon and Google had taken sufficient action to prevent fake reviews on their websites. Amazon said that month that social media companies need to do more to address “bad actors” soliciting fake reviews.