New FTC Guidelines for Consumer Reviews

Companies marketing to consumers using online reviews, testimonials, or other endorsements, as well as platforms collecting, facilitating, and publishing consumer reviews, should be aware of recent guidance by the Federal Trade Commission (“FTC”) in this area.

Background

The FTC has historically targeted so-called fake and deceptive endorsements, such as online consumer reviews, as part of its enforcement against misleading and deceptive advertising. For more information on the history of these regulations, see our client alert on FTC Endorsements.

Recent FTC Activity

Just last month, in January 2022, the FTC has taken several steps in this area, including:

• Publishing new guidance for online retailers and review platforms.[1] Examples of specific “dos and don’ts” are outlined below, with some being unexpected for companies.
• Sending multiple letters to companies offering review management services, confirming the avoidance of collecting or publishing negative reviews violates the FTC Act.[2]
• Announcing a $4.2 million settlement against an online fashion retailer that allegedly blocked negative reviews of its products from being posted on its own website.[3] Specifically, the FTC claimed that the retailer used a third-party online product review management interface to post four- and five-star reviews to its website and hold lower-starred reviews for approval, but that the “negative” reviews were never posted.

In particular, the new published guidelines for marketers and retailers, Soliciting and Paying for Online Reviews: A Guide for Marketers, states:

• Don’t ask for reviews only from customers you think will leave positive ones. (This may come as a surprise to many businesses as it conflicts with common practices.)
• Don’t ask for reviews from people who haven’t used or experienced the product or service.
• Don’t ask staff, family, or friends to write reviews, at least without ensuring appropriate disclosures.
• Don’t participate in “pay-to-play” comparison websites that claim to give unbiased expert reviews but that obtain better ratings, reviews, and placement in exchange for a fee.
• Don’t condition an incentive for a review on a positive outcome.
• Don’t use review platforms to improve your company’s reputation and visibility without clearly disclosing the commercial relationship with the platform.
• Don’t misuse reporting mechanisms to flag honest negative reviews.
• Don’t boost reviews and ratings by allowing others to write fake positive reviews.
• Monitor what SEO, reputation management, and others are doing on your behalf.

In addition, Featuring Online Customer Reviews: A Guide for Platforms, outlines:

• Publish all genuine reviews and don’t exclude negative ones. (This practice was the subject of the recent FTC settlement mentioned above and may come as a surprise to businesses that feature “positive” reviews on their websites or elsewhere.)
• Don’t display reviews in a misleading way, such as positive ones more prominently.
• Treat positive and negative reviews equally.
• Have reasonable processes in place to verify that reviews are genuine and not fake, deceptive, or manipulated, as well as appropriate take down and other response measures. (In other words, having written policies could be used as a defense.)
• Clearly and conspicuously disclose any material connections, such as compensation or a free product in exchange for a review.
• Clearly and conspicuously disclose how you collect, process, and display reviews.
• Don’t prevent or discourage people from submitting negative reviews.
• Don’t edit reviews to alter the message.

This new guidance follows multiple FTC press releases announcing its intent to crackdown in this area as well as written notices to more than 700 companies for purported unlawful practices relating to the use of endorsements and testimonials in late 2021. Third-party platforms (e.g., Google) have also taken action against incentivized reviews that violate website terms. Thus, it is important for businesses—especially those marketing or advertising using consumer reviews or other endorsements—to seek compliance advice at the outset and, of course, if an action arises. Kronenberger Rosenfeld regularly advises clients with FTC issues, including on endorsement issues, advertising, and disclosures, and defending FTC and related actions.

[1] Soliciting and Paying for Online Reviews: A Guide for Marketers (ftc.gov); Featuring Online Customer Reviews: A Guide for Platforms (ftc.gov)

[2] Generic Letter (ftc.gov)

[3] Fashion Nova will Pay $4.2 Million as part of Settlement of FTC Allegations it Blocked Negative Reviews of Products | Federal Trade Commission