16 CFR Part 465 (FTC Consumer Reviews Rule)

16 CFR Part 465 is the Federal Trade Commission's Consumer Reviews and Testimonials Rule, finalized in August 2024 and effective October 21, 2024. It codifies what the FTC had previously pursued case by case under Section 5 of the FTC Act, and it gives the agency authority to seek civil penalties per violation rather than only injunctive relief.

For a local service business, the rule covers six prohibited practices: fake or AI-generated reviews, buying positive or negative reviews, undisclosed insider reviews (employees, family, contractors), company-controlled review websites that pose as independent, illegal review suppression, and selling or buying fake social media indicators like followers or views.

The suppression provision is the one that catches most owners off guard. Section 465.6 prohibits using unjustified legal threats, physical intimidation, or false accusations to get a consumer to remove or stop posting a negative review. It also bars publishing only a curated subset of reviews when you know or should know the omitted ones are materially less favorable, in a way that creates a misleading overall picture.

This is why review gating is a direct compliance problem. Gating typically routes happy customers to public platforms while routing unhappy customers to a private feedback form instead. The FTC has stated that selectively soliciting reviews based on predicted sentiment can constitute deceptive suppression, because the resulting public rating no longer reflects the actual distribution of customer experiences.

Review routing, by contrast, is compliant: every customer is offered the same path to a public review on Google or another platform, and unhappy customers may additionally be offered a private channel to reach the owner. The public option is never hidden, conditioned, or removed based on how the customer feels.

Insider reviews are the second trap. Section 465.4 requires that anyone with a material connection to the business (owner, employee, immediate family, or paid contractor) disclose that connection if they post a review or testimonial. A plumber asking his brother to leave a five-star Google review without disclosure is a textbook violation.

Penalties scale with the FTC's annual inflation adjustment. As of 2024 the maximum civil penalty is $51,744 per violation, and the agency has taken the position that each fake review, each suppressed negative review, and in some cases each consumer who saw the misleading content can count as a separate violation. The math gets bad quickly for a shop that has been gating for years.

The rule applies to businesses of any size. There is no small-business carve-out, and state attorneys general can also bring actions. For a typical home services operator, compliance comes down to three habits: ask every customer for a review the same way, never threaten or pay anyone over a review, and disclose any material connection when an insider posts.