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LEGAL: Review Websites Are Top FTC Enforcement Priority

Several Companies Pushing Fake Reviews

In February 2019, the Federal Trade Commission brought its first case challenging fake paid reviews on an independent retail website. In settling the agency’s complaint, the company and its owner resolved allegations that they made false and unsubstantiated claims for their garcinia cambogia weight-loss supplement and that they paid a third-party website to write and post fake reviews on Amazon.com.

According to the complaint, the defendants advertised and sold the capsules on Amazon.com as an appetite-suppressing, fat-blocking, weight-loss pill. FTC attorneys alleged that the defendants paid a website, amazonverifiedreviews.com, to create and post Amazon reviews of their product. According to the FTC, the owner told the website’s operator that his product needed to have an average rating of 4.3 out of 5 stars in order to have sales and to, “Please make my product … stay a five star.”

As described in the FTC’s complaint, the reviews the defendants bought were posted on Amazon.com and gave the product a five-star rating. The complaint charged the defendants with representing that the purchased Amazon reviews were truthful reviews written by actual purchasers, when in reality they were fabricated.

The FTC’s complaint also alleged that the defendants made false and unsubstantiated claims on their Amazon product page, including through the purchased reviews, that their garcinia cambogia product is a “powerful appetite suppressant,” “Literally BLOCKS FAT From Forming,” causes significant weight loss, including as much as twenty pounds, and causes rapid and substantial weight loss, including as much as two or more pounds per week.

Fast forward.

Since February 2019 the FTC has initiated a number of CID investigations and subsequent enforcement actions against marketers for failing to comply with its Endorsement Guidelines.

Most recently, according to an FTC lawsuit, Sunday Riley Modern Skincare, which sells cosmetics through Sephora and other retail chains, decided that bogus reviews were the way to go.

The FTC alleges that the CEO and other company managers created Sephora.com accounts and, posing as customers, wrote positive reviews for their own products and encouraged other company employees to do so.

But that’s not all.

The FTC alleges that when Sephora removed fake reviews coming from Sunday Riley’s IP address, the company used a Virtual Private Network to conceal their identity so the fake reviews could keep on coming.

The FTC’s settlement with the company says that it will be subject to civil penalties if it engages in similar deceptive conduct in the future.

If you or your company have received a civil investigative demand or have been served with an FTC lawsuit, contact an experienced FTC defense attorney to discuss how to optimally and strategically position the matter for resolution.

According to a third FTC’s complaint, another company and its owner/CEO used their websites to sell fake indicators of social media influence, including fake followers, subscribers, views and likes to users of social media platforms, including LinkedIn, Twitter, YouTube, Pinterest, Vine, and SoundCloud.

The FTC alleges the defendants sold fake Twitter followers to actors, athletes, musicians, writers and others who wanted to increase their appeal as online influencers. The FTC also alleges that the defendants sold fake Twitter followers to motivational speakers, law firm partners, investment professionals and others who wanted to boost their credibility to potential clients.

According to the FTC, the defendants filled more than 58,000 orders for fake Twitter followers, enabling the buyers to deceive potential clients about their social media influence.

Devumi also allegedly had more than 4,000 sales of fake YouTube subscribers and over 32,000 sales of fake YouTube views to its clients, including musicians who wanted to increase the apparent popularity of their songs. The FTC contends that the defendants thereby enabled their customers to deceive both potential viewers and potential music purchasers.

In addition, according to the complaint, the defendants sold more than 800 fake LinkedIn followers to marketing, advertising and public relations firms; companies offering computer software solutions; banking, investment, and other financial services firms; human resources firms; and others. These fake followers, the complaint alleges, enabled the buyers to deceive potential clients, investors, partners, and employees.

The proposed court order settling the case contains both conduct and monetary provisions.

It bans the defendants from selling or assisting others in selling social media influence to users of third-party social media platforms. The order also prohibits the defendants from making misrepresentations, or assisting others in doing so, about the social media influence of any person or entity or in any review or endorsement of any person, entity, product or service.

Finally, the order imposes a monetary judgment against the owner/CEO of $2.5 million, the amount that the FTC alleges he was paid by the company or its parent company. The order specifies that upon payment of $250,000, the remainder of the judgment will be suspended. However, if the owner/CEO is later found to have misrepresented his financial condition to the FTC, the entire judgment immediately will become due.

Richard B. Newman is an Internet marketing attorney focusing on federal agency litigation at Hinch Newman LLP. Follow him on Facebook @ FTC Defense Attorney.

Informational purposes only. Not legal advice. May be considered attorney advertising.

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Richard B. Newman

Richard B. Newman is an Internet Lawyer at Hinch Newman LLP focusing on advertising law, Internet marketing compliance, regulatory defense and digital media matters. His practice involves conducting legal compliance reviews of advertising campaigns across all media channels, regularly representing clients in high-profile investigative proceedings and enforcement actions brought by the Federal Trade Commission and state attorneys general throughout the country, advertising and marketing litigation, advising on email and telemarketing best practice protocol implementation, counseling on eCommerce guidelines and promotional marketing programs, and negotiating and drafting legal agreements.

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