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Areas of Interest
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 tseligman@fkks.com, or Jess Smith at (212) 705-4876 or jsmith@fkks.com, or any other member of the Frankfurt Kurnit Advertising Group.
Other Advertising Law Alerts
What the Advertising Industry Can Learn from Kim Kardashian’s Settlement with the SEC
On October 3, 2022, the Securities and Exchange Commission (SEC) announced that it entered into a $1.26 million settlement with Kim Kardashian over her social media promotion of the EMAX token without disclosing payment she received from token issuer, EthereumMax. The matter provides important lessons for advertisers. Read more.
October 10 2022
Get Ready for California’s New “Automatic Renewal” Rules
California recently amended its Automatic Purchase Renewals law. The amended statute - effective July 1st -- require marketers to provide consumers of automatic renewal or continuous service offers with more information and easier ways to terminate. Read more.
June 22 2018
“Made in the U.S.A.” Claims Continue to be Scrutinized
In 2016, California amended Section 17533.7 of the California Business and Professions Code ("Section 17533"), liberalizing the standard for selling products labeled "Made in U.S.A" to California consumers. Read more.
June 4 2018
