Business Category Podcasts Reports
Contact My Account About
Click to Share

FTC Puts Businesses on Notice About Fake Reviews

October 20, 2021 Kelly Kovack
October 20, 2021
Shutterstock

The Federal Trade Commission (FTC) put hundreds of businesses on notice about fake reviews and other misleading endorsements. The rise of social media has blurred the line between authentic content and advertising, leading to an explosion in deceptive endorsements across the consumer marketplace.

The FTC is sending a clear message to businesses that use endorsements to deceive consumers by leveraging its Penalty Offense Authority to remind advertisers of the law to deter them from breaking it. The agency sent a Notice of Penalty Offenses to more than 700 companies placing them on notice that they could incur significant civil penalties—up to $43,792 per violation—if they use endorsements in ways that run counter to prior FTC administrative cases.

“Fake reviews and other forms of deceptive endorsements cheat consumers and undercut honest businesses," said Samuel Levine, Director of the FTC's Bureau of Consumer Protection. "Advertisers will pay a price if they engage in these deceptive practices.”

The Notice of Penalty Offenses allows the agency to seek civil penalties against a company that engages in conduct that it knows has been found unlawful in a previous FTC administrative order, other than a consent order. The Notice sent to the companies outlines a number of practices that the FTC determined to be unfair or deceptive in prior administrative cases. These include, but are not limited to:

  • Falsely claiming an endorsement by a third party.
  • Misrepresenting whether an endorser is an actual, current, or recent user.
  • Using an endorsement to make deceptive performance claims.
  • Failing to disclose an unexpected material connection with an endorser.
  • Misrepresenting that the experience of endorsers represents consumers' typical or ordinary experience.

Companies receiving the Notice represent many large companies, top advertisers, leading retailers, top consumer product companies, and major advertising agencies. A recipient's presence on this list does not in any way suggest that it has engaged in deceptive or unfair conduct.

In addition to the Notice, the FTC has created multiple resources for businesses to ensure that they follow the law when using endorsements to advertise their products and services.

This new messaging from the FTC is undoubtedly a much stronger stance than the slap on the wrist Sunday Riley received in a 2019 judgment regarding fake product reviews the brand asked employees to write between November 2015 and August 2017.

×

2 Article(s) Remaining

Subscribe today for full access