We recently hosted an insightful webinar featuring Hudson Cook attorney, Jay Harris, and Carla J. Alicea, Director of Research and Performance at SatisFacts & ApartmentRatings. Together, they addressed key questions regarding the new FTC regulations on consumer reviews, offering valuable guidance on compliance, risk mitigation, and maintaining transparency in online reputation management practices. Below is a breakdown of the critical topics covered during the video session.
New FTC Rule Enforcement Standards:
Jay explained that the Federal Trade Commission’s (FTC) new rule on consumer reviews and testimonials, effective as of October 21st, introduces enforceable standards that apply broadly to advertisers, including those in the rental housing industry. While best practices for reputation management have been in place for years, the FTC now has the authority to bring enforcement actions under the Federal Trade Commission Act. This shift from guidance to enforceable rules allows the FTC to levy fines, which can be as high as $51,744 per violation. These new standards prohibit several practices, including the use of fake reviews or testimonials (to include reviews from people who have not actually lived in/toured/experienced the community), reusing reviews for different products, and paying/incentivizing for positive reviews or social media indicators. Additionally, tactics like suppressing negative reviews, encouraging employees, influencers, or incentivized residents to leave a review without clear disclosure, or inflating social media influence through paid likes or followers, are strictly prohibited. The transition from a model of best practices to one with clear enforcement standards underscores the need for businesses to stay compliant and avoid aggressive reputation management tactics that could expose them to significant legal and financial risks.
Detection and Management of Fake Reviews:
Jay emphasized that businesses must implement clear, written policies for managing reviews, covering both employees and marketing agents. These policies should be effectively communicated, with employees trained on prohibited practices. A reporting system should allow for potential violations to be flagged and investigated, ensuring management is informed and able to take corrective action. Oversight is key, as businesses need to monitor social media and review platforms for any false or misleading reviews. If an employee posts a review under a pseudonym or without disclosing their affiliation with the property, the company is responsible for taking immediate corrective action, either by amending or removing the review. Additionally, while it’s permissible to remove reviews containing false or defamatory information, this process must not be used to suppress legitimate negative feedback, as doing so could violate FTC regulations. Businesses are also encouraged to ensure that third-party review management services comply with these policies to avoid any improper practices.
Compliance with FTC Rules in Marketing and Review Solicitation:
Jay explained that businesses can feature positive reviews and run raffles or contests to encourage reviews, but they must ensure transparency and disclosure. When promoting positive feedback in marketing, businesses must verify that the reviews are genuine and accurately reflect a resident’s real experience without misrepresenting them as representative of all reviews. Incentives such as raffles and points/rewards programs are permissible, but reviewers must disclose that their review was incentivized. Additionally, businesses should not pressure employees or residents into leaving specific types of reviews (e.g., five-star reviews) in exchange for rewards. The key is ensuring that all reviews are authentic and include clear, conspicuous disclosures of any incentives to comply with the FTC’s new guidelines.
Technical and Operational Adjustments
Jay emphasized that platforms offering incentives must ensure the incentives are tied to leaving a review, not its content, and reviewers must disclose participation. Review gating, such as suppressing negative feedback, creates legal risk by misaligning public perception with residents’ real experiences. Platforms must avoid promoting only positive reviews or distorting the review order, and while businesses can request review removal for policy violations (e.g., obscenity), platforms like Yelp and Google aren’t obligated to comply. For pre-reviewing reviews, businesses need consistent policies to avoid filtering content that misrepresents the property. The FTC rules will likely push major platforms to reinforce policies on fake reviews and ensure all reviews, even those not tied to transactions, are authentic and verifiable.
Responsibility and Liability:
Jay emphasized that the primary responsibility for complying with FTC rules rests with the management company or asset owner, although individual managers and employees are also accountable. Clear policies must be enforced, as the company may be held liable for any violations. Regarding anonymity in reviews, using fake names or aliases (e.g., “Daffy Duck”) is likely non-compliant under the new rules. However, platforms that collect identifying information on the backend, even if not publicly visible, can still meet FTC standards. Employees must disclose their relationship with the property when submitting reviews, while roommates are not subject to the same disclosure rules unless incentivized. Honest representation of experiences remains crucial for all reviews.
Retroactivity and Future Implementation
Jay clarified that the FTC’s new regulations will not be applied retroactively, meaning they only govern reviews and practices moving forward from the official start date of October 21st. However, businesses must align their practices with the new rules immediately, as older agreements or policies that conflict with these regulations may not protect them from enforcement actions. To prepare, Jay emphasized the importance of having clear policies, training employees and third-party agents, and implementing proper oversight systems. He also recommended monitoring review trends across regions to proactively detect and address potential violations, ensuring compliance from the outset.
To access all of the questions and answers clarified by Jay Harris during the webinar, click below for the downloadable PDF.
Best Practices to Mitigate Risk and Improve Renters’ Experiences
As Carla mentioned during the webinar, these are not just best practices to avoid financial and legal risks but also essential for maintaining trust with your prospects. Aligning your community’s reputation with renters’ lived experiences ensures prospects are not disappointed after signing a lease, ultimately improving retention and reducing risk.
Enhancing Transparency and Building Trust
Learn how renters prioritize online reviews in the face of review fraud and what steps multifamily operators should take to enhance transparency, build trust, and reduce reputational risk.
Our Commitment to Client Success and Compliance
As a multifamily research and education company specializing in both internal and external renter feedback, the mission of SatisFacts & ApartmentRatings is to support the success of multifamily operators by helping them understand resident sentiment and identify areas for improvement. By gaining insights into their performance metrics, operators can make informed operational updates and enhancements to consistently exceed resident expectations, ultimately boosting retention and driving revenue growth.
We are the premier partner in the multifamily industry for understanding resident sentiment and its impact on reputation, and the only partner ensuring our clients are in compliance with FTC guidelines. Our solutions and educational resources leverage real performance data to deliver actionable strategies that authentically and purposefully enhance performance, retention, and reputation.
