FTC Cracks Down on Fake Reviews

Just about everyone these days has used an online product review to help them make a purchase. But how reliable are these reviews? The Federal Trade Commission has strict rules against companies posting fake reviews written by employees, but it’s a practice that’s more common than consumers realize. It’s also a practice that can have more consequences than advertisers and merchants realize.

In an effort to crack down on fake product reviews, the FTC has been aggressively researching complaints against companies who appear to engage in this practice. The most recent company to come under the FTC gun is public relations company Reverb Communication, which was hired by video game developers to promote their games. The FTC charged Reverb Communications and its sole owner, Tracie Snitker, with deceptive advertising after it found that the company’s employees were posing as ordinary consumers posting game reviews online at the iTunes store, and not disclosing that the reviews came from paid employees working on behalf of the developers.

“Companies, including public relations firms involved in online marketing, need to abide by long-held principles of truth in advertising,” said the director of FTC’s Division of Advertising Practices in a press release. “Advertisers should not pass themselves off as ordinary consumers touting a product, and endorsers should make it clear when they have financial connections to sellers.”

As part of the FTC settlement agreement, Reverb Communications and Snitker are required to remove any previously posted endorsements that misrepresent the authors as independent users or ordinary consumers, and that fail to disclose a connection between Reverb and the seller of a product or service. The consent agreement also bars Reverb and Snitker from posting product reviews under the guise of ordinary consumer reviews unless they disclose any relevant connections that they have with the seller of the product or service.

It’s the FTC’s policy not to impose fines on consent orders, but future violations after the consent is issued can result in a civil penalty of up to $16,000. Perhaps the biggest “fine,” however, is that companies lose their credibility in the eyes of consumers. It also opens them up to individual and class action lawsuits based on unfair and deceptive business practices.