Members Operation Clean Turf Redux
The state of New York first cracked down on bogus online reviews back in 2013. Settlements were reached with 19 companies to stop writing fake online reviewed and pay more than $350,000 in fines. The investigation was dubbed “Operation Clean Turf” and focused upon the reputation management industry, astroturfing and false endorsements.
Earlier this month, the NY OAG announced that it had been investigating a number of moving service companies that allegedly paid for at least 60 fake positive online reviews posted under the heading “CHECK OUT OUR REVIEWS POSTED BY CUSTOMERS JUST LIKE YOU.” Reports indicate that they companies are now on the hook for over $65,000 in penalties and costs.
Fake online reviews are roundly considered to be the false advertising of the 21st century. In fact, statistics show that 88% of shoppers incorporate online reviews into their purchase decisions. A Harvard Business School/BU report from a few years ago states that 20% of all online reviews on Yelp! were fake.
The recent enforcement action by the New York Attorney General evidences that regulators may be taking a bigger interest in this consumer protection area. In the words of the NY AG herself, “My office has zero tolerance for scammers who attempt to defraud and deceive New York consumers.” The Federal Trade Commission has also been ramping up the enforcement of the Endorsement Guidelines, including social media influencer campaigns.
The FTC Endorsement Guidelines apply to consumer, expert and celebrity endorsements. For example, and without limitation:
- Substantiation must exist to support claims made by endorsers
- The endorser’s experience must be consistent with what other consumers will generally achieve
- “Actual consumers” must be actual consumers or if it’s not an actual consumer, this must be disclosed clearly and conspicuously
- An “expert” opinion must be supported by an actual exercise of that expertise in evaluating the product
- Where a material connection exists between the endorser and the seller, with limited exception, this connection must be clearly disclosed
- The consumer, expert or celebrity must have actually used the product and must give his/her genuine opinion about the product.
See the FTC Endorsement Guidelines, here and here.
Interestingly, in September an Italian court handed down a 9-month prison sentence to a person who wrote fake hotel reviews on Trip Advisor in exchange for money from several hundred hotels.
Richard B. Newman is an FTC attorney at Hinch Newman LLP. Follow him on Facebook at FTC defense lawyer.
Attorney advertising. Informational purposes only. Not legal advice. Previous case results do not guarantee similar future result. Hinch Newman LLP | 40 Wall St., 35th Floor, New York, NY 10005 | (212) 756-8777.