The use of consumer reviews as a marketing strategy has grown exponentially in recent years, and brands have become increasingly reliant on consumer reviews as a marketing strategy to drive consumer purchase behavior. In fact, a recent study by Bright Local revealed that over 85 percent of consumers trust online reviews as much as recommendations from relatives and friends, and a study by Northwestern University suggests that having at least five quality product reviews can increase the likelihood of a purchase by 270 percent. It’s no wonder that brands face enormous pressure to generate and present positive reviews on their own and through third-party websites and platforms.
The importance and impact of consumer reviews have not gone unnoticed by the Federal Trade Commission (FTC). We reported on a settlement between Fashion Nova and the FTC over allegations that Fashion Nova suppressed negative reviews and in so doing misrepresented that the reviews it did publish accurately represented the views of all customers who had purchased the product. As previously reported, Fashion Nova agreed to pay the FTC $4.2 million and, as part of the consent order, agreed to display all reviews except those unrelated to the products being sold.
On the heels of this settlement, the FTC issued two new pieces of business guidance, one directed at marketers and the other directed at platforms and websites, setting forth best practices relating to the use of consumer reviews. While marketers are encouraged to read both guidance documents, our focus here is on the guidance issued to marketers. While, as you would expect, the guidance focuses on the themes of transparency, honesty and disclosure, the FTC also makes clear that brands not only are responsible for following best practices with respect to the reviews they display on their own sites, but also may be responsible for the actions of the third-party websites and platforms they work with and can be held liable if those third parties don’t play by the rules. For those like us who have been following the trends at the FTC, this should come as no surprise. For years, the FTC has been expanding the potential liability of marketers for the actions of third parties that help facilitate their marketing campaigns. Indeed, the due diligence and monitoring responsibilities that the FTC places on brands in this new guidance are strikingly reminiscent of the monitoring and due diligence requirements the FTC imposed on marketers regarding the use of influencers.
The FTC offers the following guidance when brands solicit and display consumer reviews on their own websites:
- Don’t ask for reviews from people who haven’t used or experienced the product or service.
- Don’t ask your employees to write reviews unless you can ensure that they will disclose the personal connection in their reviews.
- Don’t ask for reviews only from customers you think will leave positive ones.
- If offering an incentive, don’t condition it on a positive review, and ensure that the incentive is disclosed.
The FTC offers the following guidance when brands are working with third parties such as review or comparison websites:
- Determine whether the websites you are working with operate pay-to-play operations that offer better ratings, reviews and placement in exchange for a fee. The FTC considers such sites to be deceptive and encourages brands not to work with them.
- If you work with a review platform or website that offers to collect consumer reviews and improve your brand reputation, make sure the fact that the platforms or websites are being paid is disclosed.
- Don’t misuse a platform’s reporting mechanisms to flag negative reviews by suggesting that those reviews are fake or violate the platform terms.
- If working with SEO and reputation management companies to boost customer reviews and ratings, make sure you know what they are doing behind the scenes—how are they soliciting and moderating the reviews.
Of course, none of this guidance is new or groundbreaking, but the FTC has made clear that fake, misleading or deceptive consumer reviews are an enforcement priority and that everyone in the ecosystem may be held responsible. In addition to the guidance set forth above, marketers may want to take this opportunity to review their own internal policies and procedures. The following are some additional best practices to keep in mind during the process of that review:
- Focus on how the reviews are solicited—either internally or by third parties. The FTC and even the NAD are very focused on the solicitation process. Look at the language used to solicit the reviews to determine whether there may be a reasonable implication that only positive reviews are welcome.
- Don’t incentivize only positive reviews. Even with a disclosure, the FTC will likely view such a practice as inherently deceptive because it may encourage consumers not to tell the truth.
- Ensure that the reviews are coming from verified users. If you are using third-party review sites or platforms, determine what tools they have in place to ensure that the reviewers are bona fide users.
- Display positive and negative reviews and display them with equal prominence. That’s what got Fashion Nova in trouble.
- Do your due diligence on third-party sites and platforms. Determine on your own what they are doing behind the scenes in terms of solicitations, incentives, and moderation and display. If the third party incentivizes consumer reviews and/or accepts payment from your business, spot-check to ensure the proper disclosures are being made.
- Remember that the FTC Endorsement and Testimonial Guides apply—the reviews must come from bona fide users and represent the honest opinions of the reviewers; material connections must be disclosed; and any results referenced must reflect the typical customer experience, or that typical experience must be disclosed.
The FTC has its headlights shining brightly on consumer reviews. Now is the time to review your practices and procedures, your contracts with third parties, and your monitoring policies and procedures to ensure that you don’t become the deer in those headlights.