The Federal Trade Commission (FTC) says it’s cracking down on bogus reviews online. The FTC, which is committed to protecting consumers and competition by preventing anti-competitive, deceptive and unfair business practices, says that if companies cheat on consumers, they’ll be willing to hold them accountable.
FTC crackdown on fake online reviews
The independent US agency uses its Penalty Offense Authority to remind advertisers of the law and deter them from breaking it.
Social media and its prolific boom have blurred the line between authentic content and advertising. As a result, deceptive and dishonest mentions are rampant online, with bogus reviews dominating the web.
Fake reviews can devastate small businesses
For small businesses, fake reviews online can have a devastating impact. A false negative review can damage a company’s reputation, while a false positive review can have an unfair impact on the competition. With reviews now a ubiquitous part of online shopping, the need to eliminate fake reviews online has never been greater.
As Samuel Levine, director of the FTC’s Office of Consumer Protection, comments: âFake reviews and other forms of deceptive endorsements deceive consumers and undermine honest businesses,â adding:
“Advertisers will pay a price if they engage in these deceptive practices.”
Notice of criminal offenses
In an effort to reduce the practice of fake online reviews, the FTC is sending out notices of criminal offenses. The notice of criminal offenses allows the FTC to seek penalties against a business that it knows has been illegal in a previous FTC administrative order, other than a consent order.
The advisory warns a company against illegal practices related to the use of endorsements and testimonials. The notice informs a business that it could face significant civil penalties – up to $ 43,792 per violation – if it uses a dishonest endorsement.
The official letter lists practices that the FCA has found to be misleading or unfair in past administrative cases. These practices include misrepresenting an endorsement by a third party, misrepresenting whether an endorser is an actual, current or recent user, using an endorsement to make misleading performance claims, omitting to disclose an unexpected material connection with an endorser and the misrepresentation that the experience of the endorser represents the typical or ordinary experience of consumers.
FTC Resource Guide
The FTC has created a resource guide for businesses to help them maintain legal practices when using endorsements to advertise their products. The guide lists important information about referrals, social media contests, online review programs, employee referrals, affiliate or network marketing, intermediaries, using testimonials, and more.
More than 700 companies have received notices of criminal offenses from the FCA. The recipients are large corporations, leading retailers, leading advertisers, leading consumer products companies and large advertising agencies.
A list of companies receiving the FTC notice is available on the agency’s website.