Last week, the New York Attorney General, Andrew Cuomo, announced a settlement with cosmetic surgery outfit Lifestyle Lift over the publishing of fake consumer reviews on the Internet. The settlement is based upon a business model where the advertiser was publishing allegedly fake consumer reviews on the Internet (known as “Astroturfing”) and creating websites that appeared to be independent but in fact were allegedly controlled by the advertiser.
In summary, Lifestyle Lift employees published positive reviews and comments about the company to trick Web-browsing consumers into believing that satisfied customers were posting their own stories. The Attorney General stated that these tactics constitute deceptive commercial practices, false advertising, and fraudulent and illegal conduct under New York and federal consumer protection law. The settlement marks the first State Court action against the growing practice of “astroturfing,” in which employees pose as independent consumers to post positive reviews and commentary to Web sites and Internet message boards about their own company.
Under the settlement, Lifestyle Lift will stop publishing anonymous positive reviews about the company to Internet message boards and other Web sites, and will pay $300,000 in penalties and costs to the State of New York.
This settlement is further evidence that Internet marketing is increasingly being scrutinized to determine if, among other things, identities and relationships are properly disclosed.
FEDERAL TRADE COMMISSION TESTIMONY TELLS US THEY ARE LOOKING CLOSELY:
On July 22, 2009, David Vladeck, Director of the FTC’s Bureau of Consumer Protection, testified before the Senate Subcommittee on Consumer Protection, Product Safety, and Insurance of the Committee on Commerce, Science, and Transportation.
The testimony addressed a wide range of issues, including but not limited to: (1) food and dietary supplement health and safety claims; (2) endorsements and testimonials; (3) cold/flu claims; (4) weight loss claims; and (5) economic assistance claims – including claims to provide free gifts or free trials. You can obtain a copy of the prepared statement at www.ftc.gov/os/testimony/111hearings.shtm.
The following statements caught my attention and should catch yours as well:
1. The Commission considers its work in the dietary supplement and weight-loss area to be a high priority;
2. The FTC is giving increased scrutiny to food advertising;
3. The FTC expects to issue revised Endorsement Guides later this year; Consumers have a right to know when they are being subject to a sales pitch, and material connections between a consumer/endorser and a company must be disclosed if the connection may affect the weight or credibility of the endorsement;
4. The FTC is actively enforcing against economic assistance claims, and claims to provide free gifts to consumers (and promotion of “free trials” that are actually continuity programs); and
5. The FTC is increasingly going straight to Federal court in advertising substantiation cases, rather than initiating administrative proceedings.
The above summary only briefly addresses the issues raised in the testimony.