Business owners are wise to tread carefully when it comes to encouraging consumers to place reviews online using social media or other platforms. The Federal Trade Commission (FTC) recently announced that it will crackdown on deceptive endorsements made online. The feds state they will use consumer protection laws to hold businesses’ accountable for misleading comments made on social media. Comments like reviews praising the business that are not made by actual customers.
How do we know the feds are taking this seriously?
The FTC sent out formal notices to over 700 companies including Amazon, Apple, Facebook and Google as well as retailers like Anheuser-Busch, automotive companies like General Motors and major corporations like Comcast and AT&T.
What types of violations is the FTC looking for?
- Reviews that claim they are by a third-party, but are not
- Claiming to use the product when the reviewer has not
- False or deceptive claims about the performance of a product
The feds also expect a reviewer to disclose if they have a connection with the business or other factors that may make their experience different from that of a typical consumer.
What are the penalties for a violation?
Penalties can vary, but the notices sent by the FTC state businesses could face up to $43,792 in fines for each individual violation.
How can my business avoid an allegation of deceptive marketing practices?
The FTC provides resources to help businesses navigate the rules for proper endorsement of a product. It is important for business leaders to know that these rules generally apply to social media and violations can quickly add up to a hefty fine. As such, those who face allegations of a violation are wise to take the matter seriously.