The Federal Trade Commission rule targeting fake reviews and paid testimonials went into effect this week. The rule bans the creation, purchase or sale of reviews and opinion pieces attributed to fictional customers, or real ones who are financially compensated without plainly disclosing the transactional nature of the relationship. The rule, which subjects offenders to civil penalties, also takes aim at businesses who use threats or coercion to thwart the publication of negative reviews that are genuine. The new FTC rule was approved by unanimous vote in August.

FTC Chair Lina Khan marked the occasion with a post on X advising people who encounter the prohibited practices to take action at reportfraud.ftc.gov.

The rule extends to AI-generated “people,” and also prohibits “knowingly selling or buying fake followers and views to inflate the influence or importance of social media accounts for commercial purposes,” writes Engadget, adding that “false celebrity endorsements aren’t allowed and companies can’t pay or otherwise incentivize genuine customers to leave positive or negative reviews.”

Violating any of the measures “could prove extremely costly,” with fines of up to  $51,744 per instance, says Engadget.

“Fake reviews not only waste people’s time and money, but also pollute the marketplace and divert business away from honest competitors,” Khan said when the rule went to vote in August. Details can be found in the summer announcement.

The final rule is 16 CFR Part 465: Trade Regulation Rule on the Use of Consumer Reviews and Testimonials.

Fast Company says the new policy is “aimed at protecting consumers from unscrupulous reviews, which could misleadingly influence their decision to purchase a product,” but adds that “just because the new rules are in place doesn’t mean unscrupulous businesses won’t still try to use some of these tactics, but at the very least, they give businesses firm guidelines about what is and isn’t permissible.”

PCMag points out that these particular rules “don’t necessarily apply retroactively,” quoting an FTC spokesperson saying the provisions “only apply to fake testimonials that are placed now that it’s in effect.”

There is, however, a loophole. “It’s always been illegal under the FTC Act to develop and post fake online reviews. So, we could always use the larger FTC Act, which prohibits deceptive and misleading acts and practices in commerce, to enforce retroactively,” the spokesperson told PCMag.