The FTC announced today that it sent letters to ten (unspecified) companies, warning them that it had “reason to believe” that each company “is violating or has violated the Consumer Review Rule.” The specific conduct at issue for each company is redacted from the published letter, along with each company’s name, but the examples included are “providing compensation to your employees in exchange for the employee obtaining 5-star reviews from friends and family, and obtaining reviews from individuals who did not have actual experience with the company’s products or services.”
In addition, the letter warns that while it “does not reflect a formal determination that you have violated the Consumer Review Rule,” each company is “advised to immediately cease and desist any conduct that does not comply with the Consumer Review Rule, and, if necessary, take remedial action (such as by removing potentially problematic reviews and testimonials from websites under your control, and making your best effort to have them removed from third-party websites).” Further, the letter reminds the recipient that should the FTC receive additional reports of non-compliance following this notification, the company could face further legal action, including the filing of a federal lawsuit, with potential civil penalties of up to $53,088 per violation. Each recipient is required to respond within five business days. (Merry Christmas.)
The warning letter includes a summary of conduct prohibited by the Consumer Review Rule, a list well-worth reviewing with your marketing team:
- Don’t create, buy or sell fake reviews, i.e., reviews that misrepresent the reviewer’s experience (positive or negative) with the product or service or whether, or to what extent, the reviewer used the product or service.
- Don’t condition any incentives you offer for a review on the review expressing a particular sentiment (positive or negative), e.g., “Love our product? Write a review and we’ll send you a gift!”
- Make sure any company insiders (e.g., your employees and agents and their family members) reviewing your company or its products or services include a material connection disclosure in their reviews, e.g., “I work for the company and I love their products.”
- If you own or run a website that rates or ranks the products that you and your competitors sell, don’t claim the site is editorially independent. Sites that purport to exercise editorial independence in ranking and reviewing products must in fact be independent, not owned or controlled by a company whose products are reviewed.
- Don’t scare consumers from providing negative reviews and don’t purport that your review page includes reviews of all kinds if it doesn’t include any of the negative reviews that you (or your agent) have moderated out.
- Don’t buy or sell indicators of social media influence (i.e., follower numbers) that you know, or should know, are fake, like from a bot.
As a reminder, as the FTC tells us, the purpose of FTC warning letters is “to warn companies that their conduct is likely unlawful and that they can face serious legal consequences, such as a federal lawsuit, if they do not immediately stop.” The FTC claims that companies that receive these letters do typically correct their practices and come into compliance and that “warning letters are the most rapid and effective means to address the problem.”
But the ten companies that received these letters are not the only ones who should be paying attention. That the FTC sent the letters and published them, along with two press releases, tells all of us that the Consumer Review Rule is alive and well and the FTC has every intention of taking steps to ensure compliance. So make sure to review the list of prohibited practices closely with your team when you’re back from your holiday break!
