An automobile shipment broker based in Georgia, has agreed to a settlement with the Federal Trade Commission 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 broker’s website represented that 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.”
The complaint marks the first time the Commission has charged a company with misrepresenting online reviews by failing to disclose that it gave cash discounts to customers to post the reviews.
“Companies must make it clear when they have paid their customers to write online reviews,” said Jessica Rich, Director of the Commission’s Bureau of Consumer Protection. “
According to the complaint, the company and its owner 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 related 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;
- Provided consumers with “Conditions for receiving a discount on reviews,” which said that if they 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;”
- 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;
- Failed to disclose the material connection between the company and their consumer endorsers — namely, that respondents compensated consumers to post online reviews;
- Deceptively represented that its favorable reviews were based on the unbiased reviews of customers.
The proposed order settling the Commission’s charges prohibits the respondents from misrepresenting that 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.
Contact an advertising law attorney to discuss how to persuasively use endorsements while complying with FTC Guidelines.
Information conveyed in this article is provided for informational purposes only and does not constitute, nor should it be relied upon, as legal advice. No person should act or rely on any information in this article without seeking the advice of an attorney.
