‘Tis the season … can the FTC keep up?

Back in February, the Federal Trade Commission sued an online (via Amazon, of course) marketer of weight loss pills. The defendant had paid another online outfit for generating phony, positive reviews.

Now with what’s shaping up to be a record December of online sales, the FTC is dealing with what has become a widespread phenomenon. There’s a law against sellers blocking negative reviews by embedding the prohibition in online forms, so-called “gag clauses.” The FTC started going after them in May.

People have always been paid to shill products. I chuckled recently when watching an archived film of Arthur Godfrey from the early 1950s, who, in the middle of a long promotional film for Eastern Airlines, pauses to light a cigarette and extol the virtues of Chesterfields. An ad within an ad.

Fake reviews are something else, not just because they’re generated automatically or by paid reviewers, none of which is disclosed to the consumer. In the online context, they somehow magnify the lie, the way online magnifies so much else.

In recent months, the FTC has started to go after online sellers that use fake reviews. It settled with two online sellers of cosmetics. In one, the case against Sunday Riley Modern Skincare, the agency imposed lots of restrictions and a staff training requirement about endorsements and reviews. But no fine. A Wired analysis of the case describes sharp dissent by two commissioners against what the dissenters felt was a wrist slap. The headline, that the FTC “fosters” fake reviews I think is unfair, even if you believe it should have sent a stronger signal to an egregious faker.

There’s a bigger point. Fake reviews are misleading, and generating them with bots or paid reviewers is cheating. For that matter, so would sabotaging a competitor with automated or paid negative reviews. I think it’s worth asking whether FTC should expend the resources necessary to go after fake reviews, as opposed to fraudulent claims made directly by product sellers themselves, and other illegal activities the agency is chartered to go after. You could argue that forcing staff to write good reviews, paying people to review favorably but not disclosing it and using review-generating sites to flood yourself with 5-star ratings, is in fact making false claims. And such claims are illegal under the FTC Act. Yet when it comes to the always-nebulous claims for classes of products like cosmetics, you have to ask who believes such nonsense in the first place.

Once I was drawn into a shop on a busy street in a southern city. I liked the colorful soaps they were displaying. Ignoring my wife’s eye rolls, I consented to a sample application of a facial tonic the saleswoman said included “stem cell technology.” I know that was gibberish, but I like a good face lotion. I asked how much, and the demonstrator answered, “Two seventy five.” I thought, for less than three bucks I’ll try a tube. But she meant $275 for a tiny little bottle.

Sunday Riley Modern Skincare seems to have gotten the message, sort of. I checked, via the Sephora web site. I looked at its “Good Genes All-in-One Lactic Acid Treatment,” $158 for 1.7 ounces. At least it’s made in a “vegan, cruelty-free, gluten-free” manner.  Sunday Riley products still get mostly 5-star reviews. But there are some zingers and you can sort reviews with worst at the top. Good or bad, though, the reviews are all anonymous.

I guess my question is, how far should the FTC go in trying too protect the hopelessly gullible? It’s more a practical question than a legal one, given the ocean of online stuff out there and the galaxies of 1-star and 5-star ratings and everything in between.

Perhaps the answer lies in what lengths a marketer goes to, to generate false reviews. In the case of Sunday Riley, the FTC found that Ms. Riley emailed employees on a virtual private network, giving them instructions on how to hide their identities. They were under orders to always give five stars and click thumbs down to negative reviews they found.

It’s good to have the FTC on patrol for this sort of scheming, but no agency can catch everything.

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