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Chris Crum writes for Small Business Resources about what's new for small business. Chris was a featured writer with the iEntry Network of B2B Publications where hundreds of publications linked to his articles including the Wall Street Journal, USA Today, LA Times and the New York Times.

FTC Cracks Down on Fake Online Reviews by Businesses

FTC Cracks Down on Fake Online Reviews by Businesses

The Federal Trade Commission (FTC) recently announced that it is cracking down on businesses who leave fake online reviews designed to deceive customers who may believe they are legitimate.

The Commission says it is sending a "clear message" that if businesses try to use such fake endorsements, the FTC will be ready to hold them accountable with "every tool at its disposal." The Commission credits the rise of social media with blurring the lines between content that is authentic and that which is essentially an advertisement, which has led to an "explosion" of deceptive endorsements.

According to a press release issued by the FTC (and the below tweet from FTC Chair Lina Khan), the Commission is using its "Penalty Offense Authority" to remind advertisers of the law, and deter them from breaking it, by sending a Notice of Penalty Offenses to over 700 companies. The notice warns that those in violation may incur up to $43,792 in fines per violation if they use endorsements in ways that "run counter to prior FTC administrative cases."

The Notice of Penalty Offenses allows the FTC to seek civil penalties against a company that engages in conduct that it knows has been found unlawful in a previous FTC administrative order, other than a consent order.

Federal Trade Commission

Image via Twitter

To ensure the companies in question are not confused about its intentions, the FTC outlined in the notice what practices are determined to be unfair or deceptive in prior administrative cases. Included are cases where:

  • Businesses falsely claim an endorsement by a third party
  • A business misrepresents whether an endorser is a current/recent user
  • Those using an endorsement to make deceptive performance claims
  • Businesses not disclosing an unexpected material connection with an endorser
  • Businesses misrepresenting that the endorser’s experience represents consumers’ typical/ordinary experiences

There are many recognizable brands on the list of the 700 companies put on notice, from tech giants like Amazon and Google, to traditional brands like Nike and The Coca-Cola Company, illustrating just how ubiquitous the practices in question are, although the FTC is careful to point out that just because a company is on the list of recipients is not an indication that it has actually engaged in deceptive or unfair conduct. The notices are simply a warning not to do so.

Samuel Levine, the director of the FTC’s Bureau of Consumer Protection, commented, “Fake reviews and other forms of deceptive endorsements cheat consumers and undercut honest businesses. Advertisers will pay a price if they engage in these deceptive practices.”

Samuel Levine

Samuel Levine, Director, Bureau of Consumer Protection, Federal Trade Commission  (via Twitter)

While the current round of notices mostly targets large businesses and advertising agencies, smaller businesses would also do well to recognize and avoid problematic practices. For those unsure about how their own practices are looked upon by the Commission, FTC.gov has guides with more information.1


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