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FTC Sends Out Official Warnings to Over 700 Brands Over the Use of Fake Reviews

As eCommerce continues to rise, so too do deceptive methods of advertising, including fake reviews, undeclared paid endorsements and other practices that fall foul of federal laws.

And now, the FTC is looking to step up its action on this front, with the Commission this week sending out notices to over 700 businesses, including Facebook, Amazon, and LinkedIn, about their use, or facilitation of false reviews and ads to promote products online.

As explained by the FTC:

The rise of social media has blurred the line between authentic content and advertising, leading to an explosion in deceptive endorsements across the marketplace. Fake online reviews and other deceptive endorsements often tout products throughout the online world. Consequently, the FTC is now using its Penalty Offense Authority to remind advertisers of the law and deter them from breaking it.”

The FTC says that by sending its Notice of Penalty Offenses to these organizations, it’s effectively notifying each of their need to either address these issues, or risk penalties of up to $43,792 per violation.

“The Notice of Penalty Offenses allows the agency to seek civil penalties against a company that engages in conduct that it knows has been found unlawful in a previous FTC administrative order, other than a consent order.”

So now that the FTC has sent out these warnings, it has a legal basis to implement penalties in future instances, if so detected.

What the specifics are in each case is unclear, but the FTC does explain that the range of violations highlighted in its notifications include:

  • Falsely claiming an endorsement by a third party
  • Misrepresenting whether an endorser is an actual, current, or recent user
  • Using an endorsement to make deceptive performance claims
  • Failing to disclose an unexpected material connection with an endorser
  • Misrepresenting that the experience of endorsers represents consumers’ typical or ordinary experience.

These violations cover a broad range of practices, which are particularly applicable in social media marketing, and with the use influencers in promotions also on the rise, it’s worth familiarizing yourself with the latest regulations to ensure that you don’t also fall foul of the FTC’s rules.

The FTC has also created an overview guide to its endorsement rules to provide more assistance in this respect.

It’ll be interesting to see whether this new push from the FTC actually leads to more specific legal action on this front, and what that will mean for the marketing sector. And again, with the use of influencer marketing on the rise, you can imagine that many will fail to meet the specific criteria, leading to further concerns.

As such, it is worth reading up on the latest rules.

The FTC has published a full listing of the 700 companies that it’s sent out notices to here.


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