Reputation management has been seen as a crucial marketing tactic in the property management business for years. Apartment companies take great pains to cultivate positive renter reviews, sometimes offering incentives for satisfied customers to leave glowing recommendations.

But those days are coming to an end. A Federal Trade Commission rule that took effect Oct. 21 will change the way property management firms handle reviews.

“Some of the traditional approaches and traditional business concerns and consumer preferences … have to fit into this adjusted lens of disclosures,” said Jay Harris, a partner in Washington D.C.-based law firm Hudson Cook, during a session at the National Multifamily Housing Council's OPTECH Conference last week in Maryland. 

The new FTC rules, which apply to a range of industries, do the following:

• Prohibit fake or false reviews and consumer and celebrity testimonials, including ones generated by artificial intelligence. 
• Prohibit businesses from providing compensation or other incentives conditioned on the writing of consumer reviews expressing a particular sentiment, either positive or negative. The conditional nature of the offer of compensation or incentive may be expressly or implicitly conveyed.
• Prohibit certain reviews and testimonials written by company insiders that fail to clearly and conspicuously disclose the giver’s material connection to the business. The conditional nature of the offer of compensation or incentive may be expressly or implicitly conveyed.
• Prohibit a business from misrepresenting that a website or entity it controls provides independent reviews or opinions about a category of products or services that includes its own products or services.
• Prohibit a business from using unfounded or groundless legal threats, physical threats, intimidation or certain false public accusations to prevent or remove a negative consumer review. They also bar a business from misrepresenting that the reviews on a review portion of its website represent all or most of the reviews submitted when reviews have been suppressed based upon their ratings or negative sentiment.
• Prohibit anyone from selling or buying fake indicators of social media influence, such as followers or views generated by a bot or hijacked account.

The consequences of violating these rules could be costly. The maximum civil penalty is $51,744 per violation, but courts could take other factors into account, according to the FTC.

New policies, procedures

With the FTC’s new rules, apartment operators must have a new mindset around managing reviews, experts say. 

“Where we are right now is, instead of looking at your reputation from a management standpoint, you want to look at your reputation from a risk standpoint,” said Lia Nichole Smith, senior vice president of education and research at Apartment Ratings and SatisFacts, an El Segundo, California-based firm that provides employee and resident experience consulting services.

To prepare for the rules, Smith encouraged attendees to train for reviews similarly to how they provide employee instruction on issues like sexual harassment and fair housing.

“They go through all of these trainings to help mitigate risk for your company,” Smith said. “That's where we are right now when it comes to education [for reputation management].”

Another presenter, Christina Steeg, senior vice president of marketing and communications for Chicago-based real estate investment and property management company Waterton, suggested that companies create standard operating procedures and guidelines for how they handle reputation management.

“When new employees are coming into your organization, they need to be accountable and to take that mandatory training so they can understand the voice and the sentiment and what is permissible in your organization,” Steeg said.

Review suppression and partner changes

Beyond general training, operators also need to revamp specific practices that might have been permissible in the past. If an apartment operator uses influencers to market properties, Steeg said companies need to be prepared to add disclaimers.

“[The influencers] now have to make sure that they're putting the disclaimers in there, and the onus is on the influencer to do that,” Steeg said. “But as the company, if they're not adding that disclaimer into your Reels and your Instagram feeds and your ratings and reviews … you’re going to get yourself into some trouble.”

Even though some platforms allow operators to triage or even remove poor reviews from their websites, Harris cautioned against it. She urged firms to develop policies about these negative responses. 

“If you're putting your own websites up there, there's a way in which you can go into the platform, and you can naturally adjust and suppress two- and one-star reviews,” Steeg said. “I highly suggest that you don't do that because, again, that's manipulative, and it is against the guidelines.”

However, companies must also watch what vendors outside their organization are doing. “It's very important also to make sure that your business partners are not suppressing reviews for you or that somebody on your team has asked them to suppress reviews,” Steeg said.

In the past, apartment managers would also work with companies that provide incentives for renters to leave reviews. But Steeg said operators should be “very cautious” about those programs going forward.

“Those that are applying the extra incentives, they're applying them to the individuals who leave the four-star reviews,” Steeg said. “They're definitely not going to apply to the individuals that leave the one-star review. So that's something to take into consideration.”

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