<b><i>Online Extra</b></i> FTC Cracks Down on Online Reviews

A company that touted its online reviews without mentioning that it gave customers who wrote them a discount settled deceptive advertising charges with the Federal Trade Commission on Feb. 27.

In the first case of its kind,'FTC charged AmeriFreight, a'broker that arranges the shipment of consumers' cars, with failing to disclose that it gave $50 discounts to customers who posted reviews.

The reviews didn't have to be positive, but there was an incentive to write something nice: a $100 monthly award for the 'most captivating subject line and best content.'

For the FTC, the key point was the AmeriFreight didn't disclose the arrangement. 'Businesses must be careful not to run afoul of a longstanding principle of FTC law: consumers have a right to know when there's a material connection between an advertiser and an endorser,”wrote FTC attorney Victor DeFrancis in the agency's blog.

The reviews matter. Consider a'Dec. 29 post on Yelp'from Courtney C. in Berkeley, Calif. ”I ultimately chose AmeriFreight for their price and ratings/reviews,' she wrote.

In an interview, AmeriFreight owner Marius Lehmann said, 'The only thing we didn't do right was inform the public that we do compensate for reviews.'

Paying for reviews is a'widespread industry practice, he said, calling it 'very strange' that his company, which is based in Peachtree City, Ga., was singled out by the FTC. He also stressed,”We don't expect people only to do positive reviews.'

In'settling the case, the FTC seemed more interested in sending a message than punishing AmeriFreight. There were no monetary penalties. Instead, without admitting wrongdoing, AmeriFreight agreed not to claim its customer reviews are unbiased, and to 'clearly and prominently disclose any material connection, if one exists, between them and their endorsers.”

The company must also maintain records of its advertisements and other relevant documents, and must notify the FTC about any changes in corporate structure or affiliation with new businesses that could affect its compliance with the order, which will expire in 20 years.

AmeriFreight was represented by Miller & Brown.

On Yelp, several commentators disclosed the incentive to post AmeriFreight reviews, writing that they thought other consumers ought to know. Lehmann last year responded to 'Didi B' of Los Angeles, 'We encourage customers to leave honest reviews so we can see how we perform and where we fall short. Reviews help us to improve our services according the feedback we receive from our customers. We DO NOT compensate for only good reviews. All reviews are being compensated, good or bad.'

Jenna Greene writes for'The National Law Journal, an ALM sibling of Internet Law & Strategy. She can be reached at'[email protected].

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A company that touted its online reviews without mentioning that it gave customers who wrote them a discount settled deceptive advertising charges with the Federal Trade Commission on Feb. 27.

In the first case of its kind,'FTC charged AmeriFreight, a'broker that arranges the shipment of consumers' cars, with failing to disclose that it gave $50 discounts to customers who posted reviews.

The reviews didn't have to be positive, but there was an incentive to write something nice: a $100 monthly award for the 'most captivating subject line and best content.'

For the FTC, the key point was the AmeriFreight didn't disclose the arrangement. 'Businesses must be careful not to run afoul of a longstanding principle of FTC law: consumers have a right to know when there's a material connection between an advertiser and an endorser,”wrote FTC attorney Victor DeFrancis in the agency's blog.

The reviews matter. Consider a'Dec. 29 post on Yelp'from Courtney C. in Berkeley, Calif. ”I ultimately chose AmeriFreight for their price and ratings/reviews,' she wrote.

In an interview, AmeriFreight owner Marius Lehmann said, 'The only thing we didn't do right was inform the public that we do compensate for reviews.'

Paying for reviews is a'widespread industry practice, he said, calling it 'very strange' that his company, which is based in Peachtree City, Ga., was singled out by the FTC. He also stressed,”We don't expect people only to do positive reviews.'

In'settling the case, the FTC seemed more interested in sending a message than punishing AmeriFreight. There were no monetary penalties. Instead, without admitting wrongdoing, AmeriFreight agreed not to claim its customer reviews are unbiased, and to 'clearly and prominently disclose any material connection, if one exists, between them and their endorsers.”

The company must also maintain records of its advertisements and other relevant documents, and must notify the FTC about any changes in corporate structure or affiliation with new businesses that could affect its compliance with the order, which will expire in 20 years.

AmeriFreight was represented by Miller & Brown.

On Yelp, several commentators disclosed the incentive to post AmeriFreight reviews, writing that they thought other consumers ought to know. Lehmann last year responded to 'Didi B' of Los Angeles, 'We encourage customers to leave honest reviews so we can see how we perform and where we fall short. Reviews help us to improve our services according the feedback we receive from our customers. We DO NOT compensate for only good reviews. All reviews are being compensated, good or bad.'

Jenna Greene writes for'The National Law Journal, an ALM sibling of Internet Law & Strategy. She can be reached at'[email protected].

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