Fake reviews are more than just unethical
The Federal Trade Commission’s (FTC’s) recent intervention serves as a friendly reminder to businesses: if you compensate consumers for reviewing your product or service, you must disclose this compensation. AmeriFreight, an automobile shipment broker based in Peachtree City, Georgia, has agreed to a settlement with the FTC that will halt the company’s allegedly deceptive practice of touting online customer reviews, while failing to disclose that the reviewers were compensated with discounts and incentives.
The FTC’s complaint marks the first time the agency has charged a company with misrepresenting online reviews by failing to disclose that it gave cash discounts to customers to post the reviews. Jessica Rich, Director of the FTC’s Bureau of Consumer Protection stated, “companies must make it clear when they have paid their customers to write online reviews. If they fail to do that then they’re deceiving consumers, plain and simple.”
AmeriFreight is an automobile shipment broker that arranges the shipment of consumers’ cars through third-party freight carriers. Its website claims the company had “more highly ranked ratings and reviews than any other company in the automotive transportation business.” As part of its advertising, it encouraged consumers to “Google us ‘bbb top rated car shipping.’ You don’t have to believe us, our consumers say it all.” Due to these statements, AmeriFreight and its owner, Marius Lehmann, violated Section 5 of the FTC Act by failing to disclose that they compensated consumers for their online reviews. Specifically, according to the complaint, the respondents provided consumers with a discount of $50 off the cost of AmeriFreight’s services if consumers agreed to review the company’s services online, and increased the cost by $50 if consumers did not agree to write a review. They also outlined “conditions for receiving a discount on reviews,” stating if consumers leave an online review, they will be automatically entered into a $100 per month “Best Monthly Review Award” for the most creative subject title and “informative content.”
Omission is also a lie, folks
They also contacted consumers after their cars had been shipped to remind them of their obligation to complete a review to receive the “online review discount,” and qualify for the $100 award. However, they failed to disclose the material connection between the company and their consumer endorsers; namely: AmeriFreight compensated consumers to post online reviews. Finally, and perhaps most offensively, AmeriFreight deceptively represented that its favorable reviews were based on the unbiased reviews of customers.
How the FTC is punishing AmeriFreight
In order to settle the FTC’s charges, AmeriFreight is prohibited fom misrepresenting their products or services are highly rated or top-ranked based on unbiased consumer reviews, or that customer reviews are unbiased. It also requires the respondents to clearly and prominently disclose any material connection, if one exists, between them and their endorsers.
AmeriFreight must also maintain records of their advertisements and other relevant documents, and must deliver copies of the order to company principals, officers, directors, managers, employees and others. Finally, they must notify the FTC about any changes in corporate structure or affiliation with new businesses that could affect their compliance with the order, which will expire in 20 years.
For more information:
The FTC has information for consumers about detecting and avoiding deceptive and misleading advertisement, as well as, how to submit comments about such transgressors electronically. Use this intervention as a word to the wise: if you offer an incentive in order to receive reviews from consumers, you absolutely must disclose this incentive fully and completely or risk facing penalties from the FTC.