You can offer incentives for reviews under federal law, but only if you disclose the incentive clearly and never tie it to a positive rating. That is the short answer. The longer answer is that most of the platforms where reviews actually matter, including Yelp, Google, and Amazon, prohibit incentivized reviews entirely, so what federal law permits your review platform may still punish.
What Federal Law Actually Requires
Two sets of rules govern this. The FTC’s Endorsement Guides at 16 CFR Part 255 set the baseline: whenever a business gives a reviewer something of value, and that connection isn’t obvious to readers, the reviewer must disclose it.1eCFR. 16 CFR Part 255 – Guides Concerning Use of Endorsements and Testimonials in Advertising The FTC calls this a “material connection.” Free products, gift cards, contest entries, discount codes, and cash all count.
In October 2024, the FTC’s Trade Regulation Rule on the Use of Consumer Reviews and Testimonials (16 CFR Part 465) took effect and turned much of that guidance into enforceable law with civil penalties attached.2Federal Register. Trade Regulation Rule on the Use of Consumer Reviews and Testimonials Two provisions matter most if you’re weighing an incentive program.
First, the reviewer must have actually used what you sell. The rule defines “purchasing” a review broadly to cover money, gift certificates, products, services, discounts, coupons, and contest entries given in exchange for a review.3Federal Trade Commission. Trade Regulation Rule on the Use of Consumer Reviews and Testimonials – 16 CFR Part 465 Paying someone to write about a product they never touched is a violation.
Second, and this is where businesses trip themselves up, you cannot condition the incentive on a particular sentiment. Offering $10 for a review is fine. Offering $10 for a five-star review is not.3Federal Trade Commission. Trade Regulation Rule on the Use of Consumer Reviews and Testimonials – 16 CFR Part 465 The line runs through your request language too. Wording like “tell us what you loved” alongside an incentive can read as conditioning the reward on positive feedback.
What a Compliant Disclosure Looks Like
The FTC requires disclosures to be “clear and conspicuous.” A reader should meet the disclosure without any effort. Hiding it behind a “more” link, burying it at the end of a long post, or slipping it into a run of hashtags all fail the test.4Federal Trade Commission. FTC’s Endorsement Guides: What People Are Asking
Effective language is short and plain: “I received a free sample,” “Paid partnership,” or “Company gave me this product.” The notice needs to be visible on every screen size, including phones where platforms truncate longer text. On Instagram, only the first few lines display before the “more” button, so if the review sits in those opening lines, the disclosure has to sit there too.5Federal Trade Commission. .com Disclosures: How to Make Effective Disclosures in Digital Advertising
Video adds requirements. The disclosure has to appear in the video itself, not just the text description, and the FTC recommends putting it in both audio and on-screen text so viewers actually catch it. Live streams need periodic repetition, because viewers drop in throughout, and a single note at the start won’t reach anyone who joined late.6Federal Trade Commission. Disclosures 101 for Social Media Influencers
One point that surprises people: negative reviews still need disclosure. If a reviewer received a $25 gift card and leaves a one-star review, the incentive matters to other readers evaluating that review. Disclosure obligation attaches to the connection, not the sentiment.4Federal Trade Commission. FTC’s Endorsement Guides: What People Are Asking
What Still Violates the Rule Even With Disclosure
Disclosure fixes the incentive problem. It does not fix everything.
Review gating. This is the practice of surveying customers first and only inviting the satisfied ones to post publicly. The Consumer Review Rule’s incentive provisions don’t cover gating directly, but the FTC has stated that gating can still violate Section 5 of the FTC Act as its own deceptive practice.3Federal Trade Commission. Trade Regulation Rule on the Use of Consumer Reviews and Testimonials – 16 CFR Part 465
Suppressing negative reviews on your own site. The rule prohibits a business from presenting the reviews on its website as if they represent most or all submissions when unfavorable ones have been filtered out. In December 2025, the FTC sent warning letters to ten companies flagging potential violations of these provisions.7Federal Trade Commission. FTC Warns 10 Companies About Possible Violations of the Agency’s New Consumer Review Rule
Insider reviews without disclosure. Officers, owners, executives, and managers who review their own company’s products on third-party platforms must disclose their relationship. The same rule reaches employees, agents, and family members when insiders ask them to post. Something as simple as calling a product “my company’s” or “my wife’s company’s” can be enough. If an insider solicits reviews from employees and doesn’t tell them to disclose, the business is exposed even without an explicit instruction to hide the connection.8Federal Trade Commission. The Consumer Reviews and Testimonials Rule: Questions and Answers
Where the Platforms Say No Anyway
Even a fully compliant federal disclosure won’t save you on the biggest review sites. Their terms of service function as private contracts, and violating them can wipe out years of accumulated reviews.
Yelp
Yelp is the strictest. Businesses cannot ask anyone to review them at all. Not customers, not mailing list subscribers, not friends or family. Offering freebies, discounts, or payment in exchange for reviews is explicitly prohibited, and Yelp warns that doing so may also be illegal.9Yelp. Don’t Ask for Reviews When Yelp catches compensated review activity, it places a Consumer Alert pop-up on the business page that generally stays for 90 days if the behavior stops.10Yelp for Business. What are Consumer Alerts?
Google prohibits offering incentives in exchange for reviews on Google Maps and Google Business Profiles. Its policy defines incentivized reviews as those influenced by payment, discounts, free goods or services, or any other benefit, and treats them as fake and misleading content.11Google Help. Incentivized or Biased Reviews – Maps User Contributed Content Policy Help Offering incentives to post, change, or remove reviews is not allowed even with disclosure.12Google Business Profile Help. Tips to Get More Reviews
Amazon
Amazon prohibits any attempt to contribute false, misleading, or inauthentic content, and it has suspended sellers, banned accounts, and sued fake review brokers, with courts ordering disgorgement of profits. The one formal exception is Amazon Vine, which lets enrolled sellers provide free products to a vetted group of reviewers. Vine reviewers are expected to give honest opinions regardless of sentiment, and the Vine badge on their reviews serves as the disclosure.13Sell on Amazon. Amazon Vine – Drive Business Growth With Authentic Customer Reviews
What Getting It Wrong Costs
Under the Consumer Review Rule, each individual violation can trigger civil penalties of up to $53,088, adjusted for inflation each January.7Federal Trade Commission. FTC Warns 10 Companies About Possible Violations of the Agency’s New Consumer Review Rule14Federal Register. Adjustments to Civil Penalty Amounts Each undisclosed review can count as its own violation, so a sustained campaign without disclosures builds exposure fast.
The FTC also uses Penalty Offense Notices. When the agency sends a formal notice listing specific deceptive practices, any future violation by that company triggers per-violation penalties. Hundreds of companies have received these notices for endorsement-related conduct.15Federal Trade Commission. Notices of Penalty Offenses
Fashion Nova paid $4.2 million to settle charges that it suppressed negative reviews on its website, the first FTC action targeting that specific practice.16Federal Trade Commission. Fashion Nova, LLC, In the Matter of Consent orders from these settlements typically run around ten years with ongoing compliance reporting. State consumer protection laws add another layer, with per-violation penalties generally between $1,000 and $10,000 depending on the state.
The Tax Side of the Incentive
An incentive creates tax consequences in both directions. For the business, the cost is generally deductible as a marketing expense, but individual gifts to specific people are subject to a $25-per-recipient annual deduction cap under federal tax rules. Small branded promotional items costing $4 or less with your company name permanently imprinted are excluded from that cap.17eCFR. 26 CFR 1.274-3 – Disallowance of Deduction for Gifts
On the reviewer’s side, incentive payments are taxable income. For 2026, businesses must issue a Form 1099-NEC to any reviewer who receives $2,000 or more in compensation during the tax year. That threshold rose from $600 and will adjust for inflation starting in 2027.18Internal Revenue Service. Publication 1099 General Instructions for Certain Information Returns Amounts below the threshold are still taxable to the reviewer; the $2,000 figure only sets the paperwork requirement.