Update – fake review websites

Fake review websites are an increasing problem for businesses that market their products online. A fake review site is a website/blog or other online resource which is set up for the purpose of reviewing goods and services for consumers. These sites are set up by product vendors or their online affiliates for the purpose of generating sales of their goods and services and/or commissions for online affiliates, however consumers are generally unaware of this aim. These sites often engage in misleading and deceptive conduct and create commercial issues for businesses whose competitors use them.  If one of your competitors is using a fake review websites it will likely be costing you sales.

As many of these sites are established or based in the United States, developments in US law and regulatory guidelines are very relevant. The US Federal Trade Commission (“FTC”) has recently released a revised guide concerning endorsement and testimonial advertising (“the Guide”). The Guide is effective from 1 December 2009 and will significantly increase the possibility of liability under the FTC Act.  The Guide is relevant to the problem of fake review websites as essentially these websites are providing false testimonials.

The Guide aims to make sure endorsements (i.e. positive reviews) “reflect the honest opinions, findings, beliefs, or experience of the endorser (i.e. reviewer).” Specifically, they require that:

• Advertisers (product owners) must disclose material connections between themselves and the reviewer. Material connections are those that are not reasonably expected by the audience.
• Expert endorsements must be based on an evaluation that includes “examination or testing of the product at least as extensive as someone with the same degree of expertise would normally need to conduct in order to support the conclusions in order to support the endorsement”.
• Advertisers are liable for false or unsubstantiated statements made through endorsements.
• Endorsers may also be liable for statements made in the course of their endorsements.
• Advertisers participating in a blog advertising service (which could include review websites or personal blogs) may be held liable for statements made by bloggers about the advertiser’s products. The blogger, too, may be held liable for his or her statements about the product.

As failure to do any of the above could result in liability under the United States FTC Act for the advertiser as well as the endorser, the Guide will provide companies with additional strategies for dealing with fake review sites along with those discussed in our previous article on this topic.

Please contact one of our Technology & Media lawyers if you would like further information.

Authors: Darren Sommers and Louise Tolson