As a business owner or marketer, hopefully you already understand that online reviews are a necessity for any business in the 21st century. In fact, reviews are so important that some businesses will do just about anything to rake in the 5-star ratings.
But misusing customer reviews can bring on the wrath of the Federal Trade Commission (FTC)—and a lawsuit from America’s consumer watchdog will almost certainly do more damage to your business than a 1-star review ever could.
These 5 common mistakes with customer reviews could bring major legal trouble to unsuspecting business owners. Learn which pitfalls to avoid and how to ensure your marketing complies with the law!
1. Paying for Fake Reviews
Paying for fake reviews that appear to come from genuine customers is against the law. Although this practice is very common (just search “get paid for writing reviews” to see the long list of review mills promising gift cards and swag in exchange for stars), it can lead to an FTC lawsuit.
Whether you’re thinking of buying positive reviews for yourself, negative reviews for a competitor, or a mix of the two, just don’t!
Why is this bad? Fake reviews fall under “unfair and deceptive marketing,” which is a violation of Section 5 of the FTC Act. Attempting to take down competitors through a negative review campaign could open you up to a defamation lawsuit or trade libel case, as well.
How to do it right: If you need more reviews for your business, the solution is simple: Ask every customer to leave you a review. Email your past customers and set up an automated review request for any future customers. If you have a brick-and-mortar location, post signage in strategic locations letting customers know where they can leave a review.
Although this answer may not be as enticing as the possibility of gaining an extra 2 stars overnight with paid reviews, it provides a much stronger foundation for continued success. Trust us, you don’t want to be hit with an FTC lawsuit!
Are you afraid that asking every customer to rate your business could lead to a dreaded 1-star review? If you provide a great product or service, you shouldn’t worry about this too much. Remember that you can’t please everyone, and consumers know this. Negative reviews can actually be beneficial to your business if handled correctly.
2. Offering Review Incentives to Customers
Even if reviews are coming from actual customers, you need to be careful about how you request them. Don’t offer to provide a gift card, company swag, or even a discount in exchange for a review; this could cause legal trouble.
Why is this bad? The “unfair and deceptive” part of this marketing tactic comes from customers leaving reviews without disclosing that they received material compensation in exchange.
You could make sure each review clearly states something like, “I received a $25 gift card for writing this review.” But, as you can imagine, that could damage the credibility of your reviews, as well as being a pain to monitor.
How to do it right: Instead of offering direct compensation, you could run a contest that customers can enter by writing a review. You must allow both positive and negative reviews to count toward contest entry, as well as providing a zero-cost entry option. Choose a random winner to receive a gift card or other prize.
Tell customers to include a disclaimer in their reviews, such as: “This review is a SPRING SWEEPSTAKES contest entry.” In addition to covering your legal bases, this will also allow you to easily find and tag reviews that are part of the contest.
3. Having Employees, Friends, or Family Write Reviews
Perhaps you just started a new business and haven’t had any customers yet, but you know reviews are key to attracting new clients. Or maybe you’re just getting started gathering reviews for your existing business.
It’s tempting to get your numbers up by asking employees, friends, or family members to leave you a review, but be careful about how you do it. If those relationships are not disclosed properly, you could end up breaking the law.
Why is this bad? We point once again to the “unfair and deceptive marketing” portion of the FTC Act, Section 5. Having employees or personal contacts write reviews that are intentionally misleading, making it seem as if they’re actual customers, is considered deceptive. Beauty brand Sunday Riley was busted by the FTC for a company-wide scheme encouraging employees to write fake reviews.
How to do it right: Make sure these reviews disclose the writer’s relationship with the business. If a friend writes you a well-intentioned review without a disclosure, ask them to edit the review.
Here are some examples that would be A-okay:
“George is my brother-in-law, so I called him when I was ready to look for a house. He did a fantastic job and found the perfect home within my budget!”
“I work at Basic Beauty and get to sample all of the products. This hand cream is my favorite!”
“I know Katherine personally and can attest that she’s an honest person who really knows her stuff. I will definitely use her if I ever need financial planning.”
4. Attempting to Throttle Negative Reviews Through User Agreements
It’s common practice to have clients sign a user agreement, terms of service agreement, statement of work, or other contract before accessing a product or service. Some companies have tried to… let’s just say creatively leverage these mandatory agreements to prevent negative reviews.
They’ll slip in a clause stating that the client will not post a negative review, or that any customer reviews are the intellectual property of the company (meaning the company reserves the right to remove any negative feedback).
Why is this bad? The Consumer Review Fairness Act, enacted in 2016, protects consumers’ right to post negative reviews. Attempting to stifle that right with an unlawful contract clause could lead to a lawsuit.
How to do it right: There’s no workaround to make this particular practice compliant. As we mentioned above, you can and should embrace the occasional negative review and use it to win over potential customers. If your business is receiving enough negative reviews to tank your ratings, you should focus first and foremost on resolving any legitimate complaints.
5. Highlighting Reviews with Unsubstantiated Claims
Let’s say you’ve done everything right so far: You’ve genuinely obtained plenty of 5-star reviews with glowing compliments. The reviews are from actual customers leaving feedback of their own free will, so you’re free to use them in your marketing materials as you see fit… right?
Not exactly. You can display customer reviews on your website, social media, brochures, in your store, or anywhere else that you like, but the reviews must meet the same standards as any other marketing materials.
That means any claims about the effectiveness of the product must be backed up by hard proof or be typical of the average user experience. If not, the typical average user experience must be disclosed.
Why is this bad? Any unsubstantiated claims—even if they’re coming from actual customers—are considered “unfair and deceptive marketing.” Yep, Section 5 of the FTC Act is invoked yet again!
Be careful with reviews highlighting a result that doesn’t represent the average customer experience. For example, let’s say you sell a course on flipping houses. Perhaps one customer leaves a review saying, “Totally worth the money! I made 5x my initial investment in less than a month!” Even if that’s true for this particular person, if 90% of your customers are losing money, the claim could be considered deceptive.
Health and beauty companies should be especially wary of claims about product effectiveness. A review like, “This shampoo will make your hair grow 6 inches in 2 months!” or, “I lost 50 pounds in a week!” are big red flags for the FTC. If it’s not backed up by a scientific study, it’s probably not acceptable to use in your marketing.
Finally, watch out for reviews that make unsubstantiated claims about how your product compares to others. For example, a review that states, “These teeth whiteners are twice as effective as [other brand]!” could cause you legal problems if the claim can’t be backed up by science.
How to do it right: When selecting customer reviews to feature in your marketing materials, make sure not to use any that promise unrealistic results. Even reviews on third-party sites should be screened for potential FTC violations.
You can’t always control what your customers say, but if you see a red flag review like the examples above, you should attempt to have the review edited to comply with the law, or else removed from the review platform. In some cases, that 5-star review making wild claims could actually be planted by a competitor.
Now that you know the top 5 mistakes to avoid, go forth and harness the power of customer reviews!
Want to be 100% sure your marketing tactics are above board? Schedule a confidential consultation with our experienced FTC lawyers. We can review your website, advertisements, and other materials to ensure your business is protected from the FTC.