FTC Crackdown on Misleading Reviews

FTC just sent 10 warning letters to companies alleging potential violations of its Consumer Review Rule, a “shot across the bow” that warns all companies that product reviews are important to consumer purchasing decisions and must therefore be truthful and not misleading.

These letters provide important reminders of the guardrails for product review compliance, which fall into six categories outlined in these regulations. There is more to product review compliance than this, such as when product review engagement becomes a marketing claim, but this is a good foundation. I’ve written about some of the other nuances here.

1. Fake or False Consumer Reviews, Consumer Testimonials, and Celebrity Testimonials
   Reviews and testimonials can’t be untruthful about who and how a product was, or what the experience was. Businesses may not create, buy, sell, or spread reviews they knew or should have known were fake or misleading.
   
   
2. Buying Positive or Negative Reviews
   We’ve all seen this, such as “A free coffee for a five-star review” instead of the compliant version “A free coffee for an honest review.” Companies can’t pay for, reward, or incentivize favorable reviews in exchange for perks.
   
   
3. Insider Reviews and Consumer Testimonials
   Company insiders and their close connections can’t post reviews without clearly disclosing their relationship with the business. Although well intentioned, I see this all the time.
   
   
4. Company-Controlled Review Websites
   This one just feels icky, but I have seen this several times. A business can’t pose as an independent review site while secretly promoting its own products. Control or ownership must be clearly disclosed.
   
   
5. Misuse of Fake Social Media Indicators
   Buying or selling fake followers, likes, or views is prohibited when used to falsely gain influence for commercial gain and the buyer knew, or should have known, they were fake.
   
   
6. Review Suppression
   Businesses may not threaten or mislead consumers to silence negative reviews, or pretend their displayed reviews are complete while filtering out criticism.
   

Not following the rules can result in a $53,000+ fine for every violation. FTC carries a “big stick!”

Every company should have a documented product review policy and then follow-up to ensure it is being followed. Did you know that some reviews may be removed, as long as this policy is documented and applies to all reviews, not just unfavorable ones. This is a great read.

From Consumer Review Rule. “A review is not considered suppressed based upon rating or negative sentiment if the suppression occurs based on criteria for withholding reviews that are applied equally to all reviews submitted without regard to sentiment, such as when:

The review contains: Trade secrets or privileged or confidential commercial or financial information, Defamatory, harassing, abusive, obscene, vulgar, or sexually explicit content, The personal information or likeness of another individual, Content that is discriminatory with respect to race, gender, sexuality, ethnicity, or another intrinsic characteristic, Content that is clearly false or misleading; (2)The seller reasonably believes the review is fake; or (3) The review is wholly unrelated to the products or services offered by or available at the website or platform.”

Asa Comments: This is interesting! How many times have you seen a review unrelated to the product, or a review that is clearly false or misleading? In FTC’s example, these types of reviews can be removed as long as this is properly documented and applied to both favorable and unfavorable reviews. Check with your legal counsel on this one.

Read the FTC press release and learn more about the rules.