Using Fake Review Sites? Like $250k Fines?

mont7071

mont7071

WF Premium Member
Feb 10, 2009
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Portland, OR USA
Firm to Pay FTC $250,000 to Settle Charges That It Used Misleading Online "Consumer" and "Independent" Reviews

Another example of how serious the FTC is getting about cracking down on this. You can bet that if you are using fake review sites/flogs, and more merchants end up getting hammered with quarter-million dollar fines, your business model is about to change drastically.

As always, the key is "disclosure". The more you make it clear that your site may be getting paid, may not reflect actual customer usage, etc, the "safer" you are. In this case, the merchant got nailed (both as a biz and personally) because they were actively encouraging this model among their affiliates and got caught, but even the Aff networks/programs that just look the other way rather than actively encouraging these methods are starting to get cracked down on too.
 


"fake reviews" are not just an online thing.

How many times have you walked into a clothing store (with your girlfriend, I hope) and had the employee tell her something like... "My sister has your figure and she absolutely loves that dress!" or "So many of our customers buy that, it's our best seller."
 
Daaaaaamn! I wonder if the 'This site receives compensation for clicks' disclaimer at the bottom of the landing page is enough to prevent this.
 
“Whether they advertise directly or through affiliates, companies have an obligation to ensure that the advertising for their products is not deceptive,” said David Vladeck, Director of the FTC’s Bureau of Consumer Protection. “Advertisers using affiliate marketers to promote their products would be wise to put in place a reasonable monitoring program to verify that those affiliates follow the principles of truth in advertising.”
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The FTC are becoming extremely annoying.
 
Why don't these FTC douchebags go after the big guy gas companies who raise their rates at the drop of a hat? Ghadaffi farts and the gas prices go up 20% overnight. Don't buy into that barrel bullshit. The prices wouldn't go up instantly like they do now.

I notice there is no gov intervention going on with this.

You'll notice gas companies are reporting record profits. If their costs truly went up, their profit levels would remain the same due to their "overprice" compensation.

Ok sorry for hijack. Back to your regularly scheduled programming.
 
they generated 5mil+ in sales? whats 250k compared to that? seems like a great profit on that campaign either way. Still in the plus - and now you know better. lol. Better than some of these other affiliates who are completely tore down from shit like that.
 
Heres what I thought was interesting, look at the dates the screenshots in "exhibit a" were taken: 12/3/2009

http://www.ftc.gov/os/caselist/1023055/110315llscmptexa.pdf

This market is so small compared to other bigger markets like weight loss, biz opp etc, so to me it seems like there are most likely a lot more pending cases, or cases that the FTC hasn't gotten around to yet but that they have "evidence" on.

Also, I kind of doubt this was racking up a ton of complaints which means they are likely out searching for people to punish rather than being only reactive, at least in this case. (I am making this assumption since this product doesn't seem like a scam and if it's a clickbank product refunds are really easy.)
 
Jabberwokky said:
"fake reviews" are not just an online thing.

How many times have you walked into a clothing store (with your girlfriend, I hope) and had the employee tell her something like... "My sister has your figure and she absolutely loves that dress!" or "So many of our customers buy that, it's our best seller."
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True. But the online side is the only side the FTC cares about, this is going to change everything for better or for worse. Don't hate me, but I really don't mind the elimination of those fake review sites.
 
Jabberwokky said:
"fake reviews" are not just an online thing.

How many times have you walked into a clothing store (with your girlfriend, I hope) and had the employee tell her something like... "My sister has your figure and she absolutely loves that dress!" or "So many of our customers buy that, it's our best seller."
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I actually went over exactly what you mentioned about it happening offline in my Business Law class. It's fully legal for the employees to say things like that. There was a specific word for this that the law uses, but I forgot it.
 
Jabberwokky said:
"fake reviews" are not just an online thing.

How many times have you walked into a clothing store (with your girlfriend, I hope) and had the employee tell her something like... "My sister has your figure and she absolutely loves that dress!" or "So many of our customers buy that, it's our best seller."
Click to expand...

Neither of those are guaranteeing results. One is opinion, that her sister loves the dress. The other is a fact that it's a best seller, but it was never stated in what time period. Maybe it was the best seller from 2:00pm today to 3:00pm today because it's the only one that was sold. That's not lying right there, just not providing you with all the information. Saying you will lose 55 pounds in two weeks is lying.
 
1337hovie said:
they generated 5mil+ in sales? whats 250k compared to that? seems like a great profit on that campaign either way. Still in the plus - and now you know better. lol. Better than some of these other affiliates who are completely tore down from shit like that.
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That's 5mil in sales not profits!

They are probably paying affiliates at least 75% of that in commissions. Plus taxes etc. probably bring their profits to under a million (not taking into account if a lot of the sales may be up-sells, without affiliate commissions), as I don't know their model) and if that's the case and they have been running for several years a 250k fine will really hurt.

If the possibility of a large fine was anticipated to start with and budgeted for then that is the only way that I would think that this wouldn't be very very sore for the company and will probably bankrupt it.
 
1337hovie said:
they generated 5mil+ in sales? whats 250k compared to that? seems like a great profit on that campaign either way. Still in the plus - and now you know better. lol. Better than some of these other affiliates who are completely tore down from shit like that.
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even if it was profits, thats 5% of your rev gone down the drain.

A lot of affiliates would love to hit 30% margin while a lot only get more like 15-20%, take 5% away from that and then consider your paying taxes on that as well ( i dont think getting fined counts as a deduction ) and your looking something that takes away a lot of your profit margin.
 
Jabberwokky said:
"fake reviews" are not just an online thing.

How many times have you walked into a clothing store (with your girlfriend, I hope) and had the employee tell her something like... "My sister has your figure and she absolutely loves that dress!" or "So many of our customers buy that, it's our best seller."
Click to expand...

That's not illegal, because you are fully aware that the employee works for the store. Now if the store planted fake shoppers all over the store, that would be a different issue.
 
fargo.gif


Why not showing my .gif :(

http://gifmayhem.com/wp-content/gallery/feb-2011/fargo.gif
 
johu said:
That's not illegal, because you are fully aware that the employee works for the store. Now if the store planted fake shoppers all over the store, that would be a different issue.
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What about casinos that hire fake players to play at poker tables?

What about auction houses that use fake bidders to drive up the price of goods?

What about the "advertorials" in every magazine out there? Those are exactly the same as the news channel landers that are popular in the rebill world right now, but the FTC only gives a crap about the ones online. It's all bullshit rhetoric -- the FTC has no idea how the internet works nor any idea how to regulate or monitor it, as exemplified by their brilliant "Do Not Track" list.

They're fighting a losing battle. If American-based marketers can't run flogs anymore, the foreign ones will be more than happy to step in.
 
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