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March 5th, 2015
Not Satisfied: FTC Says Car Shipment Broker Misrepresented Online Reviews
AmeriFreight, an automobile shipment broker, has agreed to settle FTC charges that it deceived customers by advertising the quantity and quality of its online customer reviews, while failing to disclose that it provided incentives to its customers to author them, in violation of the FTC Endorsement Guides. It's a cautionary tale for companies and agencies that encourage customers to review their products and services.
In the AmeriFreight case, the FTC focused on the company's claim that it has "more highly ranked ratings and reviews than any other company in the automobile transportation business," and that its self-promotion implied reviews were unbiased and unsolicited: "You don't have to believe us, our consumers say it all." According to the FTC's complaint, AmeriFreight gave customers a $50 discount if they agreed to review the company's services online, and increased the cost of their services by $50 if they did not agree to write a review. In addition, AmeriFreight entered reviewers into a $100 monthly "Best Monthly Review Award" contest. The FTC alleged that these actions violated Section 5 of the FTC Act because AmeriFreight failed to disclose the material connection between the company and its endorsers.
The FTC, notably, did not allege that AmeriFreight violated the law by rewarding its customers to write the reviews; the problem was the lack of disclosure. Although AmeriFreight did not directly tell customers to write positive reviews; presumably did not penalize customers for writing negative reviews; and sought reviews from actual customers about their actual experience - the company still ran afoul of the FTC endorsement guidelines for failing to disclose the incentives and for implying the ads were unbiased.
For more information about customer endorsements or other advertising or marketing law issues, please contact Terri Seligman at (212) 826-5580 or email@example.com, or Jess Smith at (212) 705-4876 or firstname.lastname@example.org, or any other member of the Frankfurt Kurnit Advertising Group.
Other Advertising Law Alerts
The Truth Will Set You Free: The FTC Provides New Guidance on Consumer Reviews
Late last year, Congress passed the Consumer Review Protection Act, a law designed to stop businesses from using contracts to prevent customers from posting honest reviews about the business.
March 8 2017
FTC Finds “All Natural” Claim Violated FTC Act
The FTC has issued a Final Order against California Naturel, Inc., a seller and marketer of personal care products, finding that the company's "all natural" claims were false and misleading in violation of the FTC Act.
December 15 2016
FTC Policy Statement Focuses on Homeopathic Health Claims
Last week, the Federal Trade Commission issued its new "Enforcement Policy Statement on Marketing Claims for Over-the-Counter (OTC) Homeopathic Drugs," as well as a staff report on a workshop that the Commission held last year on OTC homeopathic drug advertising.
November 28 2016