Battling another kind of “fake news”
When it comes to product reviews on Amazon or other marketplaces, it can be nearly impossible to distinguish legitimate product reviews from those paid for by a product marketer.
Fake reviews have been a pretty standard marketing tool for some time; with product owners paying companies to post rave reviews of its product and poor reviews of competing goods. Fake reviews are so ubiquitous that, according to Saoud Khalifah, founder and CEO of Fakespot, a site that flushes out fake reviews, up to 70% of reviews on Amazon are fake. This staggering figure is perhaps why the Federal Trade Commission (FTC) has finally decided (likely to the dismay of product owners) to take action.
On February 19, the FTC filed a complaint against Cure Encapsulations, Inc. and its owner Naftula Jacobowitz, alleging that the defendants violated the FTC Act by, among other fraudulent actions, paying amazonverifiedreviews.com to create and post approximately 30 Amazon reviews a day of their “weight loss” product, Garcinia Cambogia. The FTC argued that such practices constituted “unfair or deceptive acts or practices in or affecting commerce.” In light of the quick settlement by the defendants, there was no 5-star argument to refute the allegation.
The proposed court order settling the complaint prohibits the defendants from making claims for any dietary supplement, food, or drug unless they have competent and reliable scientific evidence in the form of human clinical testing supporting the claims. The order also requires the defendants to notify Amazon, Inc. that they purchased reviews of their product and to identify to Amazon the fake reviews. Finally, the order imposes a judgment of $12.8 million, to be suspended upon payment of $50,000 to the FTC, in light of the defendant’s current financial status.
While $50,000 may not seem so bad as compared to how much money can be made due to sales generated by fake product reviews, a deeper pocketed company could have been on the hook for the full $12.8 million.
This is the first time the FTC has gone after a company for paid reviews, and more actions should be anticipated now that the foundation has been laid.
In addition to bogus reviews on Amazon, fake review websites such as tvstuffreviews.com and freakinreviews.com, often featuring “as seen on tv” and weight loss products, are quite prevalent. Sites such as these look like a source of legitimate reviews; however, the “reviewers” have likely never actually tested or investigated the products they are allegedly reviewing. As such, it is probably just a matter of time before enough complaints generate an FTC investigation into the financial sources behind those reviews.
Be sure to consult an experienced attorney if you have questions or concerns about your marketing methods or how to spot and remove fake reviews.