What Does the New FTC Rule on Online Reviews Means for Contractors?

Author: Brett Knox
February 11, 2025 - 6 MIN. READ

You probably wouldn't choose to use a business with a 1-star rating, right? That's why online reviews are essential for contractors to build trust and attract clients.

The Federal Trade Commission recently cracked down on fake reviews, banning AI-generated testimonials and strengthening consumer trust in online ratings.

While this is a win for honest business owners, it also means navigating a stricter review landscape. Here’s what you need to know.

What Does the New FTC Rule on Contractor Online Reviews Mean?

Google and other online platforms have been fighting fake reviews for years in an effort to prevent unethical businesses from taking a shortcut and outshining the competition.

The FTC is now supporting these online platforms with a new rule that passed in August 2024. This rule officially bans fake reviews, and the FTC can now penalize perpetrators where it hurts the most—their wallets —with civil penalties.

Breaking Down the New FTC Rule

Let us take a closer look at what is covered under the new FTC rule:

• Fake reviews or testimonials are out. This includes AI-generated reviews and reviews from people who didn’t actually use your services.
• Buying reviews or offering an incentive are also out.
• If a review comes from an employee, a relative, or someone connected to your business, you must disclose the relationship.
• Likewise, if the review is published on a site that has ties to your business, you should disclose it.
• What if you get a bad review? The new FTC rule prohibits you from using unethical methods to get rid of it.
• Plus, when curating reviews to display on your site, you can’t leave out bad reviews and claim your selection is representative of your reputation.
• The rule also bans fake social indicators, such as paying for views, shares, likes, or comments on social media.

What Does the New FTC Rule Mean for Your Contractor Business?

To sum up, the new FTC rule aims to create an online environment where genuine reviews and ratings are protected, trustworthy, and accurately represent people's experiences with your business.

When half of consumers trust online reviews as much as personal recommendations, this new rule is about much more than stars and ratings. This new rule gives more weight to your customers’ authentic voices by cracking down on AI-generated reviews and deceptive practices.

However, since the FTC is stricter about enforcement, it’s a good idea to review your online reputation management practices.

Managing Online Reputation for Contractors

Getting glowing contractor online reviews from customers while following FTC rules is easier than you might think.

Join the Right Platforms

Leaving a five-star rating or writing a quick review for your business is a breeze when you’ve already set up a profile on the platforms that collect this information. And with the FTC now requiring business owners to disclose any relationships with review sites, trusted platforms like Facebook, Yelp, Foursquare, Google Maps, and other local directories for contractors have even more impact on your reputation.

Start by claiming or creating your business profile on these sites. Then, make your profile stand out by filling in all your business details, helping customers find you, and encouraging interactions.

Developing a Good Reputation

The FTC’s rule aims to create a balanced view with reviews that genuinely reflect good and bad experiences.

A tip: Focus on customer service, from the initial bid to project completion and eventual added-value services. Communicating clearly at every step of the process will make you far more likely to get a good review. For even more transparency, consider using tech tools like CRM platforms or procurement platforms to streamline your buying process

Besides, taking advantage of a digital supply chain platform like Raiven can help with more accurate bidding and better visibility into parts and materials availability, contributing to enhanced customer satisfaction.

You can also use tools like CRM software to track and manage communication better. Staying on top of this process will help you address issues before they escalate and lead to a bad review.

Lastly, don’t be scared to respond to bad reviews. Apologize for the bad experience and offer to discuss it so you can find a solution. Good or bad, you should incorporate customer feedback into your business and always look for opportunities to improve.

Get More Reviews

The more reviews your business has, the more credibility it will gain. Not to mention, a large number of glowing contractor online reviews can give your local rankings a nice boost.

While buying reviews is a no-go, don’t be shy about asking your customers for some feedback:

• Make the process easy. Include a link customers can follow to a platform where they can rate or review your business.
• Don’t pick and choose. If you’re asking for reviews, don’t just ask those you think will leave good reviews.
• You can’t offer compensation, but you can explain how online reviews help your business generate leads and grow.

Add Testimonials to Your Site

Featuring customer testimonials on your site is legal – and a great way to build your social proof.

Keep a few things in mind:

• Remember, you can’t pay or offer incentives against testimonials.
• You should get explicit permission from your customers to share their reviews and images.
• Make sure to respect their privacy and remove any information that could make them or their property easy to identify.

Build a Strong Reputation By Focusing on Customer Experience

This new rule from the FTC is a big win for contractors and their consumers, ensuring that online reviews remain trustworthy.

For contractors, it means following a few simple rules to build a strong online presence through genuine reviews. Following the steps outlined above, you can boost your social proof and attract more customers!

For an optimal customer experience, you should also look into improving your different processes. Raiven can help with buying and bid management.

Summary: The FTC is rolling out a new rule affecting online reviews to protect consumers from fake reviews. Find out what it means for contractors.