Faking it by Omission? The FTC Targets Undisclosed Compensation for Online Reviews

Illustration for fake website testimonials By Julie Liu

When we sift through reviews for products and services, one of our top considerations is whether the words genuinely come from the customer’s experience and not a company’s imagination. There is no way, however, to determine a reviewer’s honesty beyond relying upon whatever disclaimers he or she provides. We have previously discussed the state of the law on fake business reviews. But what about “real” reviews incentivized by the reward of a good deal? If there was any question on the matter, the Federal Trade Commission (FTC) has now provided a real-life example of how to abide by the rules.

In a recent chapter in the battle against unfair competition online, the FTC zeroed in on automobile shipment broker AmeriFreight for its persuasive approach to seeking customer feedback. The FTC alleged in its complaint that AmeriFreight offered $50 discounts to customers in exchange for writing reviews on an independent review website and advertised its services to consumers as being “top rated” based on those reviews. In addition to the discount, reviewers automatically became eligible for a $100 “Best Monthly Review Award,” further incentivizing customers to write reviews. The complaint indicated that the issue was not the encouragement of reviews; the complaint alleged that AmeriFreight portrayed the reviews as unbiased and failed to disclose that the reviewers were compensated—a violation of Section 5 of the FTC Act. The case concluded late last month with the FTC’s approval of a final consent order which requires AmeriFreight to clearly disclose any “material connection” it has with an endorser and to not misrepresent customer reviews or product ratings. Continue reading

Skipplagged.com and the New Frontier of Aggregation Software Liability

Screen Shot 2015-01-14 at 7.37.46 PMBy Robin Hammond

What does Skipplagged software accomplish?

Skipplagged.com—created by Aktarer Zaman—allows consumers to book cheaper airline tickets to major hub cities by buying tickets to non-hub cities, and only completing one portion of the trip. For example, a passenger wishing to fly from New York to San Francisco might purchase a cheaper ticket to Seattle with a stopover in San Francisco, and simply get off the plane in San Francisco. Although the practice, called ‘hidden city ticketing’, has existed for years, Mr. Zaman has created an efficient and accessible method for travelers to utilize this technique.

United Airlines and Orbitz filed suit against Skipplagged for breaching an affiliate contract with Orbitz, and helping customers to enter into contracts (by buying a plane ticket) that they intend to break. Most airlines’ ticket contracts, as well as Orbitz’s terms of use, prohibit hidden city ticketing. And recently, American Airlines, a non-party to the suit, stated the practice “is tantamount to switching price tags to obtain a lower price on goods sold at department stores.” Continue reading