US FTC sends out a mass mail warning 700 online retailers, payment facilitators, and other digital businesses about using fake reviews to dupe customers

Fake Paid Reviews FTC
Fake, paid reviews will attract penalties, warns the US FTC. Pic credit: Michael Dorausch/Flickr

The Federal Trade Commission (FTC) has sent out letters to more than 700 companies, warning them not to rely on fake reviews. The FTC has warned that such unlawful behavior would attract steep fines and penalties.

Online retailers, service providers, payment facilitators, and even fast-food joints are among the 700 companies that have received a generic warning from FTC. The agency has essentially sent out a cautionary message that reminds companies not to rely on fake or paid reviews.

U.S. FTC warns about fraudulent, fake, purchased, sponsored reviews that attempt to mislead customers:

The U.S. FTC confirmed that it had sent letters warning over 700 leading companies warning them about fake or paid reviews. The agency notified the companies that this is an unlawful practice.

Companies should not rely on unlawful practices in their online marketing and advertising campaigns warned the FTC. The letter stresses that such practices could attract steep penalties:

“Receipt of the notice puts your company on notice that engaging in the conduct described therein could subject the company to civil penalties of up to $43,792 per violation.”

Incidentally, FTC hasn’t singled out any company nor carried out an investigation about the 700 companies, clarified Serena Viswanathan, FTC Associate Director:

“FTC staff is not singling out your company or suggesting that you have engaged in deceptive or unfair conduct. We are widely distributing similar letters and the notice to large companies, top advertisers, leading retailers, top consumer product companies, and major advertising agencies.”

What qualifies as Fake, Paid, Sponsored reviews, according to the FTC?

It is not clear why the FTC chose to send out the warning letter to the 700 companies. Some of the notable mentions in the letter, include Adobe, Amazon, Apple, AT&T, BestBuy, Burger King, Chipotle, Dell, eBay, Expedia, and Google. The complete list is available on the official website of the FTC.

According to the FTC, some of the unlawful ways companies attract customers, include:

  • falsely claiming an endorsement by a third party; misrepresenting that an endorser is an actual user, a current user, or a recent user; continuing to use an endorsement without good reason to believe that the Endorser continues to subscribe to the views presented;
  • misrepresenting that an endorsement represents the experience, views, or opinions of users or purported users;
  • using an endorsement to make deceptive performance claims;
  • failing to disclose an unexpected material connection with an endorser;
  • and misrepresenting that the experience of endorsers represents consumers’ typical or ordinary experience.

Fake, paid, or sponsored reviews are a growing menace. Not just online retailers and services providers, even the resellers and manufacturers themselves engage in the practice.

Although many businesses tread carefully, some offer coupons or discounts with every purchase. The only condition that the customer must fulfill, is to leave a glowing, positive review about the product. Some companies contact content farms and buy reviews.

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