FTC Targets Paid Reviews; Calls Out False Product Claims
May 23, 2019 3:37 pm Comments Off on FTC Targets Paid Reviews; Calls Out False Product Claims
In February, the Federal Trade Commission made the major announcement that it had settled a case against a health supplement company. The company, Cure Encapsulation, was accused of using fake reviews to garner attention for its weight loss product on Amazon.
According to Steve Wyer of Third Coast Interactive, the company’s owner Naftula Jacobowitz paid several third-party websites to pen and post fake reviews on the Amazon shopping platform. Not only is this common practice deceptive, but it also makes it difficult for consumers to make an informed purchase. Andrew Smith, the current director of the Bureau of Consumer Protection at the FTC stated, “people rely on reviews when they’re shopping online.” He further asserted that this false feedback inflates ratings and hurts not only shoppers but also competing companies that “play by the rules.”
Jacobowitz is accused of contracting with AmazonVerifiedReviews.com to post positive reviews of his garcinia cambogia product. Jacobowitz noted in correspondence with the company that he preferred his product had five stars but agreed that 4.3 out of five was acceptable. Mr. Jacobowitz essentially paid this company to generate glowing feedback on a product they may not have even tried. The product’s Amazon page visibly stated that it was a potent and effective appetite suppressant and could block fats from forming. The description further claimed that a weight loss of up to 20 pounds was possible and could be achieved by simply taking the product. The FTC disagreed, citing that these claims were unsubstantiated by independent third-party testing.
According to records, a court order proposes that Jacobowitz be banned from manufacturing and selling dietary supplements that have not been subjected to scientific scrutiny and clinical testing. The settlement forbids the company from publishing reviews that are not posted by actual product users. The order further requires Cure Encapsulations to notify consumers and Amazon of their wrongdoing. A judgment of nearly $13 million was levied against the company; it will be suspended after a $50,000 payment to the Federal Trade Commission and after Jacobowitz meets unpaid income tax requirements. The balance is not completely wiped out, however, as Jacobowitz will be required to pay the full amount to the Federal Trade Commission if it’s later determined that his financial records have been falsified.
Why fake reviews?
Cure Encapsulations is not the first company to use paid reviews to improve its performance on Amazon. In fact, according to Wyer, it is a common practice and remains so today despite the FTC settlement. There are many ways a company can obtain reviews from customers who either don’t exist or who purchase the product in exchange for a refund and financial incentive. For many years, this practice was an easy way for businesses to boost their Amazon page rank. More reviews equal more traffic which equals a coveted spot at the top of the list when a consumer searches for a product.
Wyer explains that it can be difficult to determine if a product is actually “that good” or if reviews are simply fabricated and fake. He says that consumers should first and foremost use their best judgment. The old saying, “if it sounds too good to be true, it probably is” is perhaps the best advice he can give. He notes that products with hundreds or thousands of reviews in a relatively short timeframe have likely been altered in some way.
Amazon continues to improve its methodology for identifying fake reviews, both positive and negative. It will suspend user and seller accounts if untruthful action is suspected. But it has yet to catch all of the culprits and likely never will. For this reason, it remains up to the consumer to learn how to read between the proverbial lines and know that too many reviews may be even more suspect than none at all.
