The e-commerce market is fueled by consumer reviews. Reportedly, 90 percent of shoppers consume feedback before deciding to buy or pass. Considering those stats, it’s little wonder that fake reviews are big business. Unfortunately, some sellers say that fraudulent feedback has caused their sales to plummet up to 60 percent. The situation has reached cut-throat levels. As such, let’s take a few minutes to examine the playing field with a legal monocle.
Recent Case: Supplement Company Busted For Paid Reviews
The Federal Trade Commission recently busted yet another company for using fake, paid reviews to market health supplements on Amazon. Judging from reports, it appears to be an open-and-shut case. For starters, authorities wrangled email proof regarding a deal with amazonverifiedreviews.com to generate “30 reviews, 3 per day,” which qualifies as an FTC “unfair and deceptive” marketing violation.
Why is buying reviews against the law? Technically it violates Section 5 of the FTC Act, which states that “unfair or deceptive acts or practices in or affecting commerce…are…unlawful.” Moreover, in this case, the content of the reviews also led to legal censure. The supplement’s paid reviews included avowals like:
- The product is a “powerful appetite suppressant”;
- The supplement “literally BLOCKS FAT from forming”;
- The product aided in a host of desired outcomes: appetite-suppressant, fat-blocking, weight-loss, rapid and substantial weight loss, et cetera.
Under both FTC and FDA standards, these statements fall under the “unsubstantiated claims” umbrella. And using unsubstantiated claims in promotional material is also against the law.
In addition to a $12.8 million fine, the company must work with Amazon to help the e-commerce platform better identify phony reviews and improve its detection algorithms.
Online Review Legalities: What is Legal and What Isn’t?
As discussed, Section 5 of the FTC act forbids “unfair or deceptive” marketing. Additionally, various Food and Drug Administration standards impose even more restrictions on supplement, vitamin, and pharmaceutical marketers. But where, exactly, is the “unfair or deceptive” line? Let’s look at a few examples.
Online Review Example: Friend or Family
“I love this widget! It works exactly as advertised! I’m probably going to buy one million more! (Note: This is my nephew’s product.)”
This is a perfectly acceptable review. Yes, it’s effusive and the person probably won’t buy a million more, but “puffery” is allowed. (Advertising puffery is why every pizzeria in New York and Chicago can claim to be “the world’s best!”) Moreover, the reviewer discloses their familial relationship — which courts interpret as a “material relationship” that comes with disclosure responsibilities.
Realistically, it’s near impossible for authorities to track down friends and family who are leaving positive reviews without disclosures. Nor will they spend precious resources going after people for this lone act. However, if a company is already in deep non-compliance waters, this type of activity could, theoretically, be added as a charge and increase damages.
Online Review Example: Stranger with Unsubstantiated Review
“OMG! This is by far the best weight loss supplement I’ve ever bought! I lost 20 pounds in under a week, just by taking these pills! Buy now! You won’t regret it!”
This is an exceptionally problematic review. Even if not solicited, businesses should work to get these removed from their pages. Contact the platform, explain that unsubstantiated health claims are against FTC and FDA regulations, and ask that they strike it from your product listing. Sabotaging competitors could be the malicious posters!
If, however, the person is a true stranger to your organization, and there’s no paper trail linking your company to the problematic review, the FTC likely wouldn’t pursue the matter.
Three Review Frauds That Will Land You In Trouble With The Federal Trade Commission
- Buying fake reviews is against the law. If you get caught, you will likely be facing a hefty fine. There are ways to minimize said fine. To find out how, speak with an FTC defense lawyer.
- Posting negative reviews on competitors’ product pages without disclosures. Even if you’ve used the product and legitimately think it’s terrible, to play it legally safe, you must disclose your material interest in a competing product.
- Enlisting people to pen reviews that include unsubstantiated medical claims. False claims are serious business. If you’re caught using them, expect to tango with the FTC and FDA.
Connect with an E-commerce Lawyer
The Federal Trade Commission isn’t the only party that can sue over fake reviews. Competitors also can. And many analysts believe this may start happening more and more as the market continues to mushroom.
If you’re entangled in an online review legal issue, we can help. Give us a call. We’ll chat about your situation and lay out options, then you can decide the next step that works best.
We look forward to speaking.