Review Spam Under Attack by the FTC

I somehow missed this FTC enforcement action when it was released at the end of August. The FTC used the blogging disclosure guidelines that it released at the end of 2009 to slap the hands of an advertising firm that had it’s employee post reviews on iTunes without full disclosure.

From the NY Times article:

The Federal Trade Commission said on Thursday that a California marketing company had settled charges that it engaged in deceptive advertising by having its employees write and post positive reviews of clients’ games in the Apple iTunes Store, without disclosing that they were being paid to do so.

The charges were the first to be brought under a new set of guidelines for Internet endorsements that the agency introduced last year. The guidelines have often been described as rules for bloggers, but they also cover anyone writing reviews on Web sites or promoting products through Facebook or Twitter.

They are meant to impose on the Internet the same kind of truth-in-advertising principles that have long existed offline.

Last year, New York State settled a lawsuit against a Plastic Surgeon over false reviews but this is the first instance that I know of where the Federal Government has intervened in the review world. It is one thing to annoy the historically aggressive attorney generals of New York and another to put into motion the federal government looking at review spam. Clearly, this effort was targeted at ad agencies:

“We hope that this case will show advertisers that they have to be transparent in their practices and help guide other ad agencies,” said Stacey Ferguson, a lawyer in the advertising practices division of the trade commission’s Bureau of Consumer Protection.

That being said it should throw up a warning flag to any company doing the same. Too see an excellent example of the type of review spam that is becoming fairly common in Google Maps, see this article by Miriam Ellis. The article was written prior to the FTC ruling and Miriam asked the basic question of what would the FTC do in such situations. Now we have more than inkling of their direction.

Some other articles about the ruling:
MarketPlace: New FTC guidelines apply truth-in-advertising principles to online reviews
Citizen Media Law Project: FTC Flexes Blogger Rules Again

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27 thoughts on “Review Spam Under Attack by the FTC”

  1. I imagine there are a fair number of seo firms, who’ve been spamming Google Maps reviews, quaking in their boots about now.

  2. Yes the ad agency can outsource the work and blame them? hmm… great idea… probably better than having to have multiple proxy servers…

  3. An agency outsourcing offshore may still be liable – they should be vetting the practices of their sub-contractors. Small business owners hiring offshore spammy SEO firms might also find themselves directly on the hook for those types of practices.

  4. @Stever

    Thanks for the clarification (I was being facetious but forgot to put the :) as I assume that everyone understands my twisted humor)

  5. Considering the number of seo’s and small biz owners that read your blog Mike, spelling it out in precise terms is probably a good thing. Else we get oodles of small businesses thinking they can just outsource that to the solicitors of cheap seo services from various parts of asia and still be fine.

    FTC vs. small biz owner:

    “It wasn’t me, it was those guy’s in India (phillipines, china, pakistan, romania)”

    -But you hired them.

    “I didn’t know they were going to do that”

    -They’ve been doing it for over a year now. How come you didn’t tell them to stop, or fire them?

    “oh…snap. Mike B said it was ok :)”

    - Who’s Mike B?

    “a blogger”

    - A blogger, really. You can’t believe everything you read on the interwebs, or the twitter.

  6. So these kinds of reviews will be a thing of the past? I doubt it ;-)

    Feb. 17/10
    “Dr. Smith is so good with children, and his downtown clinic is open from 8am to 8pm seven days a week… how great is that! you can call Dr. Smith’s friendly receptionist at 123-456-7890 for an appointment”
    Jan Johnson

    Feb. 16/10
    “Dr. Smith is the best dentist I’ve ever had and his receptionist is so kind and efficient. I’ve never had a dentist (or receptionist) treat me so well before”
    Mary Jones

    Feb. 15/10
    Dr. Smith has the best prices in town; I checked around, trust me on this.
    Doug Smith

  7. I doubt it as well. But the glare of the public scrutiny with the threat of penalties will slow some of it down…stop it? not without a whole lot more enforcement than we have seen in this country.

  8. As a person who is part of a small business competing with large franchises, you still can’t let competition get in the way of simple business ethics. That is what makes you a fundamentally “better business”.

  9. @Eve

    While I agree with your placing ethics above profits, we do live in a capitalist, consumer oriented society in which all too often, big or small, profit and capital accumulation is regularly and knowingly put above such concerns. This is particularly true in corporations where there is a detachment between the need to generate profit and the need to behave ethically. But it is also true in small business and one doesn’t need to look hard to find such examples (look at limousine or locksmith businesses in Google).

    Profit, which 150 years ago was a often considered a sin, has become the stuff of hero worship these days and the overly aggressive, unethical but successful “entrepreneurs” are often considered “rogue” heros.

    My contention would be that as long as our whole system of being and way of thought revolves around profit and consumption, your view, which should be in the ascendancy, will be overshadowed by the many businesses that don’t ascribe to your thinking.

  10. @Saptak

    If you are referring to company guidelines that won’t get you in trouble and will put you in good stead with your customers and Google then I would look at the Google Review Guidelines.

    If you are looking for specific guidance on the FTC regulations I would first read the WSJ article for an overview and then the FTC guidelines themselves if you really are still looking to navigate the fine points.

    For the FTC the basic rule of thumb for enforcement so far is “disclosure”… if you are recommending something of your own or for profit then you need to so disclose.

  11. Aren’t “leaners” part of the tradition of introducing a new product? A guy who shows up at the bar with a lot to say about “Brand X” is probably hired by the beer factory.

    The guy who asks everyone at the popular overlook at the Grand Canyon to look at his new Nikon is likely suspect.

  12. @Saptak

    A cursory review of the guidelines seem to indicate that the following is the issue at hand for the FTC and they way that they would distinguish:

    Rather, in analyzing statements made via these new media, the fundamental question is whether, viewed objectively, the relationship between the advertiser and the speaker is such that the speaker’s statement can be considered “sponsored” by the advertiser and therefore an “advertising message.” In other words, in disseminating positive statements about a product or service, is the speaker: (1) acting solely independently, in which case there is no endorsement, or (2) acting on behalf of the advertiser or its agent, such that the speaker’s statement is an “endorsement” that is part of an overall marketing campaign? The facts and circumstances that will determine the answer to this question are extremely varied and cannot be fully enumerated here, but would include: whether the speaker is compensated by the advertiser or its agent; whether the product or service in question was provided for free by the advertiser; the terms of any agreement; the length of the relationship; the previous receipt of products or services from the same or similar advertisers, or the likelihood of future receipt of such products or services; and the value of the items or services received. An advertiser’s lack of control over the specific statement made via these new forms of consumer-generated media would not automatically disqualify that statement from being deemed an “endorsement” within the meaning of the Guides. Again, the issue is whether the consumer-generated statement can be considered “sponsored.”

    Bolds are mine

  13. Dear “Christian Church Pastor”

    While I appreciate you taking the time to comment and provide insight on the blog, I believe that it is inappropriate for posters to use Keywords for their name in their posts.

    For reference, I prefer folks to use their real names to encourage open and fair communication. However, if you feel it necessary, you may use a non keyword pseudonym.

  14. Mike, as you already know, there are a number of companies marketing their review services. I hear a radio ad on the EIB Radio Network (reaching millions of listeners). They claim to have to cooperation of Google. They are literally writing thousands of 5 Star gmail reviews for SMB’s and I am seeing 7 pac results where a business has as many as 50, 100 or more. It’s a joke and certainly hurts the user experience as well as Google’s local search efforts. I can’t understand why Google has not taken action. I am certain that there are many links to these companies and their “hired for gun” spammers.

  15. It is nice to see the FTC stepping in but the root of the problem falls back on Google. The reason so many firms post fake reviews is because they get results. If Google could identify a way to improve the search algorithm of Maps to ignore reviews the problem would be solved. Basically businesses can still post fake reviews as long as they add a disclaimer at the end OR in the user account itself. There is just too much gray right now in search marketing.

  16. @Mark

    That is probably very true. FTC action will likely give the more forthright agencies the ability to say no, can’t do that but it is unlikely to dampen down the widespread abuse unless they really, really beef up their enforcement efforts. It is also likely to drive these sorts of activities further underground.

    Google needs to not only adjust the algo but probably put in place some element of review filtering based on trust.

  17. Reviews are getting real big so now the FTC has to step in. Trust is the key and some policing but the government yet has it’s hand in the jar. Again

  18. Hi Mike!
    This really is big news (my delayed reception of it is due to an attack of bronchitis), but here I am coughing and reading with raised eyebrows and a sense of justice being done. As Jay says, above, this certainly is an indication that reviews are big business, and while I share your doubts that we’re going to see sweeping, across the board enforcement of this, at least we are seeing the problem acknowledged. It’s a start. Great coverage, and I’m so glad to see you posting after a bit of a lull. Local isn’t much fun without your blog.

  19. I was impressed that the FTC is really enforcing their rules… until I clicked through and actually read the article. The judgment was.. the offending company has to take down the reviews, but there was no monetary penalty?

    When the cops pull you over for speeding and let you off with a warning, that’s not enforcing the law – that’s letting you off easy.

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