Government Is Cracking Down On Fake Product Reviews

If you sell a product online, reviews could be the lifeblood of your business, driving sales up or down, depending on the reviews themselves. What better way to ensure that your business, service or product gets the reviews that it needs, than by using fake reviews? Well, the government is coaching up on this trend, and cracking down on it.

How Do Businesses Cheat?

There are a number of ways that a business can use a fake review on an online site. Businesses can simply have friends, family, or even employees write false reviews. Many so-called “marketing” companies promise fake reviews in return for payment.

Fake reviews don’t just include reviews that prop up your business. They also include fake negative reviews that are posted to competitor’s websites.

The reviews may appear on your website, or they can appear on a third party seller’s website, like Amazon or Walmart.

FTC is Getting Tough

But the Federal Trade Commission now says that these fake reviews are in fact deceptive and unfair trade practices, and that the federal government is ready to crack down on this kind of practice.

The legal basis for the crackdown comes in the difference between advertising, which is given wider leeway in what can be said, and the necessity that content be legally authentic.

But when you post your own reviews, which category does that fall under? The FTC is now leaning towards fake reviews being seen as actual statements, and not advertising, meaning that they must have a basis in truth and reality.

If your business is caught, the FTC intends to send out notices of penalty offenses. Recently, over 700 companies, large and small, have gotten these notices. The notices allow the FTC to penalize your company with hefty government fines. Dishonest and false endorsements can lead to penalties of $43,000 per violation.

What is Illegal?

Included in the violations that the FTC will start fining companies for, include false endorsements by customers or other third parties, reviews that make false claims about the product or services’ performance, or the failure to disclose whether the person reviewing has any relation to the business, service or product. Any connection between the reviewer, and your company, that a consumer would want to know about or which would impact a purchase decision, must be disclosed.

The FTC even says that it could follow up with testimonials—people who say how wonderful your product or services are—to ensure they are genuine.

The FTC has put out a guide, to assist businesses in knowing what they can and cannot do in the world of online endorsements.

Third Party Companies

Be aware that hiring a third party company to do “marketing,” and then saying you had no idea that company was posting 1,000 fake reviews for your company, won’t be a defense. The FTC won’t allow you to hide behind a third party company or an independent marketing company. Companies should be diligent about who they hire, and what those companies are doing on their behalf.

Call the West Palm Beach business litigation attorneys at Pike & Lustig to help your business grow safely, and legally.

Resource:

ftc.gov/tips-advice/business-center/guidance/ftcs-endorsement-guides-what-people-are-asking