Government agencies take action on ‘astroturfing’

In announcing the agreement, the Attorney General unequivocally condemned the practice of flooding the Internet with bogus consumer reviews, calling it the “21st century version of false advertising.”        

False Endorsements 
The FTC has also taken action against deceptive advertising, online and on the air.  

The agency recently cracked down on the use of paid-for endorsements disguised as impartial expert testimony. In March of this year, a home security company was charged with misrepresenting paid endorsements as independent reviews on various blogs and other online platforms, as well as in radio and television spots.  Paid company endorsers were introduced as child safety, home security or technology experts and the connection between the endorsers and the company was not disclosed, even though they had been paid over $300,000 to pitch the company’s products. 

The investigation concluded with a settlement agreement prohibiting the company from engaging in any future misrepresentation in their advertising. The settlement also requires that, going forward, the company disclose any monetary connection with its endorsers.

FTC Endorsement Guides
The FTC Endorsement Guides mandate that if a relationship exists between the marketer of the product or service and the endorser or review writer it should be disclosed, particularly if the relationship is not obvious or reasonably expected by the audience. Under the law, a practice is deemed deceptive if it misleads “a significant minority” of consumers.  

If a connection is not disclosed, companies run the risk of government regulatory action based on charges of deceptive business practices. They also run the risk of being sued by competitors for false advertising.  

While writing or soliciting fake reviews is prohibited, businesses are allowed to invite real customers to review their products or services online. However, if something of value is offered in return then the customer should be advised to disclose what they received within the review. An offer of something of value could induce an endorser to write an exaggerated or misleading review. Thus, a disclosure will allow consumers to individually determine the credibility of those reviews. 

Conclusion
Ensuring the validity of online reviews and endorsements is important for the protection of both businesses and consumers. The rise of astroturfing and false endorsements on the Internet has caught the attention of state and federal authorities. Companies engaged in these practices could face regulatory action or fines, or lawsuits by competitors, and are thus well-advised to correct their advertising practices to avoid those risks. 

Disclosure is the best way a business can ensure compliance with the FTC Endorsement Guides and with state law. For additional information about legal compliance in this area, contact JVC or visit our website at www.jvclegal.com.