Federal Trade Commission Announced Groundbreaking Lawsuit against a Company it Accuses of Paying for Fake Amazon Reviews

The Federal Trade Commission announced a groundbreaking lawsuit against a company it accuses of paying for fake Amazon reviews.

From the FTC release:

The Federal Trade Commission today announced its first case challenging a marketer’s use of fake paid reviews on an independent retail website. In settling the agency’s complaint, Cure Encapsulations, Inc. and its owner, Naftula Jacobowitz, resolved allegations that they made false and unsubstantiated claims for their garcinia cambogia weight-loss supplement and that they paid a third-party website to write and post fake reviews on Amazon.com.

“People rely on reviews when they’re shopping online,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. “When a company buys fake reviews to inflate its Amazon ratings, it hurts both shoppers and companies that play by the rules.”

According to the FTC’s complaint, the defendants advertised and sold “Quality Encapsulations Garcinia Cambogia Extract with HCA” capsules on Amazon.com as an appetite-suppressing, fat-blocking, weight-loss pill.

The FTC alleges that the defendants paid a website, amazonverifiedreviews.com, to create and post Amazon reviews of their product. The FTC contends that Jacobowitz told the website’s operator that his product needed to have an average rating of 4.3 out of 5 stars in order to have sales and to, “Please make my product … stay a five star.”

As described in the FTC’s complaint, the reviews the defendants bought were posted on Amazon.com and gave the product a five-star rating. The complaint charges the defendants with representing that the purchased Amazon reviews were truthful reviews written by actual purchasers, when in reality they were fabricated.

The FTC’s complaint also alleges that the defendants made false and unsubstantiated claims on their Amazon product page, including through the purchased reviews, that their garcinia cambogia product is a “powerful appetite suppressant,” “Literally BLOCKS FAT From Forming,” causes significant weight loss, including as much as twenty pounds, and causes rapid and substantial weight loss, including as much as two or more pounds per week.

The proposed court order settling the FTC’s complaint prohibits the defendants from making weight-loss, appetite-suppression, fat-blocking, or disease-treatment claims for any dietary supplement, food, or drug unless they have competent and reliable scientific evidence in the form of human clinical testing supporting the claims.

The order also requires the defendants to have competent and reliable scientific evidence to support any other claims about the health benefits or efficacy of such products. In addition, it prohibits them from making misrepresentations regarding endorsements, including that an endorsement is truthful or by an actual user.

The order next requires the defendants to email notices to consumers who bought Quality Encapsulations Garcinia Cambogia capsules detailing the FTC’s allegations regarding their efficacy claims. In addition, the order requires the defendants to notify Amazon, Inc. that they purchased Amazon reviews of their Quality Encapsulations Garcinia Cambogia capsules and to identify to Amazon the purchased reviews.

Finally, the order imposes a judgment of $12.8 million, which will be suspended upon payment of $50,000 to the Commission and the payment of certain unpaid income tax obligations. If the defendants are later found to have misrepresented their financial condition to the FTC, the full amount of the judgment will immediately become due.

The Commission vote authorizing the staff to file the complaint and proposed stipulated final order was 5-0. The FTC filed the complaint and proposed order in the U.S. District Court for the Eastern District of New York.

(NBC News) But the agency may have a lot more work to do if it wants to end the scourge of fake online reviews. An NBC News investigation found thousands of questionable reviews on Amazon, Yelp, Facebook and Google — and showed that it was possible to purchase hundreds of positive reviews within days for a new company that had never done any work.

On Google and Facebook, the profile photos of the reviewers helped expose many questionable reviews. The profiles used the likenesses of such actors and actresses Terry Crews, Megan Fox, Omari Hardwick and Abigail Breslin. Those celebrities all confirmed that they did not write the reviews in question. Jason Brown runs the consumer advocacy website reviewfraud.org and said it’s common for fake reviewers to use images of celebrities — often by accident. “What they’ll do is they’ll create their account, do a Google search for headshots and when they’re doing that to add it to their account, they’ll get famous people by mistake,” Brown said.

Over on Yelp, photos again gave away the questionable reviews. In glowing reviews for a contractor in California, three users posted beautiful photos of what they said was the finished work. However, the photos are apparently not of the contractor’s work, but stock photos that can be purchased from Getty Images and Shutterstock.

On Amazon, one reviewer had posted 676 book reviews in the past six months — every single one of them was four or five stars out of five. Many had the same generic text and a similar headline: “I really liked it!”

To see how businesses may be purchasing fake reviews, NBC News created a gardening business on Facebook and paid $168 to websites that promised to post positive reviews. Within 24 hours, the business had 999 likes and a few days after that, more than 600 five-star reviews. The reviews came from apparently fake Facebook accounts –- the profiles spread out across the globe. The reviews even include generic descriptions of the work such as “really efficient and a pleasure to deal with” and “very polite, did a wonderful job.”

While the speed and volume with which the gardening business garnered raves may be shocking, Brown said the problem is common and out of control.

“It really is the wild west and there’s no sheriff on duty,” he said.

In statements, Facebook, Google, Amazon and Yelp all said they are aware of the problem and have protocols in place to actively monitor and remove fake reviews. They also said the public can help end the problem by flagging suspicious reviews.

Brown says consumers should be vigilant and avoid reviews with these red flags:

1. Typos or broken English – many fake reviewers are based in foreign countries.
2. A sudden influx of positive reviews – that may be a sign that the business a consumer is researching has recently paid for positive influence.
3. Positive reviews spread out across the globe – a typical reviewer will have a number of reviews, both positive and negative, in the location they live and maybe a few others elsewhere. But if they only have positive reviews spread out in various countries, that’s a sign the reviewers were paid to write them.

Source: NBC News