The White House has announced new consumer protections against corporate “tricks and scams” that “waste Americans’ time and money,” from fake reviews to suspicious subscriptions and the dreaded customer service “doom loop.”
Hitting back at retailers and other corporate entities that perpetuate burdensome customer service practices—like long hold times, excessive paperwork or online forms, and other hoops and hurdles that make it tough to cancel a subscription, get a refund or shop with confidence—the Biden-Harris administration has announced a series of regulatory actions under the header, “Time is Money.”
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“Americans are tired of being played for suckers, and President Biden and Vice President Harris are committed to addressing the pain points they face in their everyday lives,” the White House briefing room wrote in a statement on Wednesday.
“These hassles don’t just happen by accident,” it said. “Companies often deliberately design their business processes to be time-consuming or otherwise burdensome for consumers, in order to deter them from getting a rebate or refund they are due or canceling a subscription or membership they no longer want—all with the goal of maximizing profits.”
Over the course of the coming months, the administration plans to take action to ensure it becomes easier for consumers to cancel subscriptions and memberships that they don’t want or didn’t sign up for in the first place. If finalized, a Federal Trade Commission (FTC) rule—which is currently under review against public comments—would require companies to make it as easy as possible to cancel a subscription.
Along those same lines, the administration is looking to tackle customer service “doom loops,” wherein people calling for help from a flesh-and-blood service representative are instead given the runaround through a “maze of menu options.” A recent consumer survey revealed that being forced to listen to long messages before speaking with a human helper was the No.1 customer service complaint.
In response, the Consumer Financial Protection Bureau (CFPB) has been tasked with initiating a rulemaking process for companies under its jurisdiction, like banks, thrifts and credit unions, which will allow customers to talk to a representative with the press of a single button. Similar rulemaking is under consideration with regard to phone and cable companies as well as healthcare providers.
Automation-weary consumers will also be relieved to find that the prolific use of customer service chatbots is also under review. While they can be useful when it comes to pointing people in the right direction for simple queries, they have a limited capacity to resolve complex issues, and frequently provide inaccurate information that leads to more wasted time and greater frustration on the part of users.
The CFPB plans to issue guidance around when institutions like banks can implement chatbots instead of providing real customer service, and will identify when the use of automated chatbots or AI voice recordings is unlawful, as customers are often duped into believing they’re speaking with a fellow human.
These forthcoming rules won’t yet impact the retail sector, but creating a pathway for regulating the automated tools upon which companies and organizations have become so reliant may have a trickle-down effect onto other industries.
Fighting fake reviews
One Biden-Harris objective that stands to immediately impact brands and e-tailers surrounds the regulation of consumer reviews, which the administration says will “[ensure] accountability for companies that provide bad service.”
The FTC is reviewing a proposal that, if finalized, would prevent marketers from employing illicit review and endorsement schemes. From posting and boosting fake, flattering reviews to suppressing honest, negative ones—or even paying for positive endorsement—companies are deceiving shoppers looking for genuine feedback on a product or service, the White House said.
A survey earlier this year from BazaarVoice indicated that consumers are onto these ploys, with 75 percent saying they’re concerned about encountering bogus reviews when shopping online. It’s a tactic Amazon sellers have been employing for years, with the company insisting that it regularly reports the fake-review brokers spamming listings with dozens of inauthentic reviews. In 2022, the tech titan filed suits against over 10,000 Facebook group administrators hawking fake consumer feedback and took aim at Auction Sentinel, a firm that sells “verified” reviews for a profit.
While it reports annually on its efforts to weed out such bad actors, Amazon itself regularly engages in farming reviews. Amazon Vine, an invitation-only program, allows “the most insightful reviewers” on the marketplace to serve as “Vine Voices,” ordering items free of charge in exchange for written product testimonials. The company has also been investigated by the FTC over allegations that it boosts its in-house brands in searches, even if those products aren’t the most relevant to a consumer’s search query, the highest-selling, or the best-rated or reviewed—another way lawmakers have said it manipulates the consumer experience.
The comprehensive final Rule on the Use of Consumer Reviews and Testimonials, released by the FTC on Wednesday, prohibits companies from buying or selling fake consumer reviews or testimonials, both positive and negative in nature. It outlaws certain company insiders from creating reviews as shoppers without disclosing their relationships to the entities being reviewed, and it addresses review suppression practices that bury or remove unfavorable consumer comments. Notably, the law also targets “fake indicators of social media influence,” criminalizing the sale or distribution of bot-generated follows, likes or views.
Such practices have “polluted the marketplace,” the FTC wrote in a blog post. “Consumers should be able to trust the authenticity of feedback they read, hear, or see about a product or service. But digital content—including reviews and testimonials—has always been easy to fake, and with generative AI tools it’s now even easier. That makes our new rule even more significant.”
The maximum civil penalty is currently set at $51,744 per violation, though it will be left in the hands of the courts to decide how many violations are applied to a given case.
“Is this new rule going to sit on the proverbial bookshelf and collect dust? You better believe it won’t,” the agency added. “The FTC will look to use it, when applicable, to go after those who employ these prohibited practices to hoodwink consumers and get an unfair leg up on their competitors.”
