What would you expect to find at a website that includes the words "verifiedreviews.com"? If you guessed fake reviews for purchase, you are correct (and you are a cynic). The Federal Trade Commission ("FTC") recently announced that it brought its first case challenging use of fake paid reviews on an independent retail website. According to the FTC complaint, Cure Encapsulations, Inc. and its officer (the "Defendants") paid a third party website to write and post fake reviews. These reviews were intended to look as if they were written by actual purchasers that awarded the weight-loss supplement 5-star reviews.
The FTC also alleged that Cure Encapsulation made false and unsubstantiated claims for their weight-loss supplement both directly and through the fake reviews that the supplement caused impressive weight loss of several pounds per week and that it blocked the formation of new fat cells. Fake claims included statements about quick weight loss, lack of hunger, improved health and energy, and that the weight loss supplement "cleans all toxins from your body and does not allow fat or sugar to stick."
The FTC brought the suit in the United States District Court, Eastern District of New York under Section 5 (a) of the FTC Act which prohibits unfair or deceptive acts and under Section 12 of the FTC Act which prohibits false advertisements for food, drugs, devices or cosmetics. The proposed court order settling the FTC complaint imposes a judgment of US$12.8 million. The judgment would be suspended upon the payment of unpaid taxes and US$50,000, although if the Defendants were later found to have misrepresented their financial condition, the full amount would be due.
The order prohibits the Defendants from making weight-loss or similar claims unless they have scientific evidence in the form of randomized, double-blind and placebo controlled human clinical testing conducted by qualified researchers to support the claims. The Defendants were also ordered not to make any health-related claims without competent and reliable scientific evidence. The proposed order prevents Defendants from making false claims about the truthfulness of an endorsement.
The Defendants would also be required to email notices to all purchasers of the weight loss product in the following form.
Subject Line: FTC says company deceptively advertised a product you bought
Other than the obvious lesson not to buy fake reviews, what does this mean for advertisers? It means that:
- Health and weight-loss claims must be supported by competent and reliable evidence.
- The advertiser is liable for false and unsubstantiated advertising claims by its endorsers
- If there is a material connection between endorser and advertiser that consumers would not expect, like a payment, discounts or free product, this must be disclosed.
If you have any questions about endorsements, reviews or advertising claims, contact the following or your Baker attorney.