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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 firstname.lastname@example.org, or Jess Smith at (212) 705-4876 or email@example.com, or any other member of the Frankfurt Kurnit Advertising Group.
Other Advertising Law Alerts
FTC Research Indicates Disclosures Help Consumers Recognize Ads
The FTC has long stated that consumers should be able to recognize an ad as an ad. And if disclosures are necessary to ensure that consumers will recognize that an ad is an ad, then those disclosures must be made in a way that ensures that consumers can understand them.
January 5 2018
New Low-Budget Waiver is Now Available for Digital Commercial Productions
Advertisers and agencies that are signatories to the SAG-AFTRA Commercials Contract can now take advantage of a new waiver issued by SAG-AFTRA and the Joint Policy Committee on Broadcast Talent Union Relations when producing low-budget digital commercials.
November 10 2017
FTC Updates Endorsement Guide FAQs and Settles First-Ever Action Against Individual “Influencers”
Recent developments demonstrate the FTC's continued interest in social media endorsements.
September 11 2017