/>iAs previously blogged about the author, digital advertisers and influencers must be aware of the requirements set forth by FTC’s Final Rule on Consumer Reviews and Testimonials.
In short, the Final Rule is intended to foster fair competition and protect consumers’ purchasing decisions. In general, the Final Rule covers: (i) the purchase, sale or procuring of fake reviews or testimonials (for example and without limitation, a reviewer that does not exist, a reviewer that did not actually use or possess experience with the product or service, or a review that misrepresents actual experience); (ii) providing compensation or other incentives in exchange for reviews that express a particular sentiment; (iii) facilitating “insider” consumer reviews and testimonials that do not contain a clear and conspicuous disclosure of the relationship; (iv) utilizing websites that appear to be independent review websites when, in fact, they are controlled by the business whose products or services are reviewed; (v) suppressing reviews, either by intimidation or by merely publishing certain reviews or ratings (for example and without limitation, only positive reviews or ratings); and (vi) misusing fake indicators of social media influence.
On November 6, 2024, the FTC announced that it had secured a proposed order against AI-enabled review platform Sitejabber that “will ensure consumers get truthful and accurate reviews.”
According to the Commission, the Federal Trade Commission charged that Sitejabber, a company offering an AI-enabled consumer review platform, deceived consumers by misrepresenting that ratings and reviews it published came from customers who experienced the reviewed product or service, artificially inflating average ratings and review counts.
Under a proposed order settling the agency’s complaint, Sitejabber will be prohibited from making such misrepresentations in the future and from making other misrepresentations about consumer ratings or reviews.
“Platforms don’t have free rein to mislead people about the consumer reviews shown for companies and their products,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Along with our rule on fake reviews and testimonials, cases like this one show that we’ll act to stop all forms of deception in the review ecosystem.”
According to the FTC’s complaint, GGL Projects, Inc., which does business as Sitejabber, collected ratings and reviews for its online business clients from consumers at the time of purchase, before they received or had the chance to experience the products or services they bought. For example, after online customers checked out, they were asked to “rate your overall shopping experience so far” on a 5-star scale and then to “type a quick message about your shopping experience so far.”
Sitejabber allegedly used these point-of-sale ratings and reviews to deceptively inflate the average ratings and review counts of its clients on the company’s review platform, claiming that the ratings “indicat[e] that most customers are generally satisfied with their purchases.” Sitejabber’s inflated ratings and review counts were also displayed in Google and other search results.
Further, the complaint alleges that Sitejabber provided its clients with pre-fulfilment product ratings and reviews by asking customers, “Why did you choose the [product] today?” and requesting a rating on a 5-star scale. The FTC alleges that, by providing clients with product review tools that allowed them to publish this feedback on their own websites as product reviews and ratings, Sitejabber provided its clients with the means to misrepresent that the reviews and ratings were from customers who had received their purchases.
Much has already been discussed about the FTC’s recent enforcement initiative, dubbed “Operation AI Comply.” One of the actions in the recent sweep is particularly noteworthy in that it reveals a novel FTC remedial approach vis-à-vis a company that provides services to third-parties (AI or not). More specifically, that case suggests that companies can be held liable under the FTC Act for failing to anticipate how their products and services could be used by third-parties to facilitate deception (the FTC alleged that the company violated the FTC Act by providing a “testimonial and review tool” because it could be used to generate fake reviews. There was no separate allegation that a third-party posted or used the generated bogus reviews, or that consumers were deceived.
In other words, the company was allegedly liable via a means and instrumentalities count for potential misuse by a third-party.
The proposed order prohibits the company from misrepresenting, or assisting anyone else in misrepresenting, that the average customer rating, number of ratings or reviews, or any rating or review of a product, service, or business reflects the views of customers who actually received the product or service purchased or had an opportunity to experience the product or service. It also bars Sitejabber from making or assisting anyone else in making any misrepresentation about any ratings, average ratings, or reviews it collects, moderates, or displays.
Importantly, the proposed order prohibits Sitejabber from providing others with the means to misrepresent that ratings or reviews collected at the time of purchase were from consumers who had received or had the opportunity to experience the product or service purchased.
On the same day, the FTC also issued a statement on “lessons from the FTC’s settlement with Sitejabber.” According to Commission staff, the settlement with Sitejabber is a reminder of “another task businesses should keep on that slow-and-steady list: building your brand through non-misleading customer reviews.”
The FTC’s case against GGL Projects, Inc., operating as Sitejabber, involves two tools the company marketed to businesses as ways to collect “an unprecedented volume of positive feedback” from customers. The problem according to the Commission?
The tools in question collected ratings and reviews from people the minute they bought a product or service, before they ever had a chance to use it, says the FTC. Then, according to the FTC’s complaint, Sitejabber displayed those reviews and ratings to prospective customers on its website and in paid Google search results without clarifying that they came from people with no experience using the products or services advertised. Sitejabber also gave business clients widgets they could display on their websites to highlight these reviews and ratings, according the Commission.
The complaint also describes an online furniture retailer with a Sitejabber profile showing 83,154 reviews, with an average rating of 4.72 stars. The FTC alleges that over 98% of those reviews and ratings were given at point-of-sale by people who hadn’t actually used the products in question. When you removed those ratings, the FTC says the business’s average dropped to 2.19 stars. “That’s a big difference that would probably matter to someone deciding whether to buy that business’s products.”
Sitejabber’s practices, the FTC says, likely misled consumers and violated the FTC Act. To resolve the case, the company agreed to take remedial action and stop purportedly making or helping others make deceptive claims about ratings or reviews.
Takeaway: Take your time to collect truthful reviews from bona fide customers. People rely on reviews when choosing to buy a product or service. If your product is new to the market, you may be tempted to seek out services to help you build up positive reviews as quickly as possible. Do not take shortcuts to five stars. Collecting reviews and building your business’s reputation takes time. Creating, buying or selling fake reviews could run afoul of the FTC’s Rule on the Use of Consumer Reviews and Testimonials, and violations can cost you. And, even if your shortcut of choice falls outside the rule – as in this case – the FTC may still investigation and/or sue you for violating the FTC Act. Additionally, when it comes to reviews, do not mislead your customers. When people see customer reviews on your website, unless you say otherwise, they are going to assume those reviews are coming from people who have purchased and tried your product or service. If that is not true, it must be made clear. Furthermore, platforms can violate the FTC Act. Businesses misrepresenting information that matters to people when choosing to buy a product or service violate the FTC Act. This includes platforms like Sitejabber when they make their own misrepresentations about third-party products or services.
