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

(CBS News) Fake reviews are increasingly prevalent across many top retailer websites, according to a study from Fakespot, which analyzes online customer reviews for fake or unreliable reviews.
  • 52 percent of reviews posted on Walmart.com are “inauthentic and unreliable,” Fakespot estimates
  • 30 percent of Amazon reviews are fake or unreliable, the study found
  • About a third of reviews on makeup retailer Sephora and video-game service Steam are also unreliable or fake, the analysis discovered
  • “My advice is to be very skeptical” when reading online reviews, said Saoud Khalifah, CEO of Fakespot

The fake reviews threaten to undermine the credibility of retailers struggling with the influx, according to Fakespot, which uses algorithms to look for patterns of deception in reviews. Manufacturers are eager to earn 5-star reviews that can push their products to the top of a search result on Amazon, for instance, with some turning to trickery to make their products stand out.

“You need a lot of good positive reviews to convince people to check out their products,” said Khalifah, who wrote a software program to detect fake reviews after getting tricked himself by glowing reviews for a sleep supplement. After the supplement didn’t work, he realized many of those positive reviews were fake.

Khalifah said his research “tells me that 1 in 3 reviews on any of these platform is highly unreliable. They have been influenced by people at the company [making or marketing the product that’s sold on the website] or written by people hired by the company. There is a lot of bias in the reviews.”

For instance, companies will send postcards to people who recently purchased a product on Amazon, promising them a gift card to the site if they write a 5-star review that gets published. Other companies hire professional reviewers to post glowing reviews, while some use bots to post fake reviews en masse.

In the case of the postcards offering gift cards in exchange for top reviews, Fakespot’s Khalifah says the customer reviews are still problematic. In some cases, the offers are only valid if the review is posted within a few days of the purchase, but that may not give a consumer enough time to test the product and figure out of it performs as advertised.

“These influenced reviews are degrading the quality of your online shopping experience,” he says.

How to detect fake reviews

Fake reviews started proliferating several years ago, but show no sign of letting up, Khalifah says. While they may seem like a nuisance, they have the potential to mislead consumers about the quality of products. And consumers tend to rely on those reviews for purchasing advice, with about 84 percent of consumers saying they trust online reviews as much as personal recommendations, Fakespot said.

Consumers can plug in the URL of a product into Fakespot’s website, which grades the reviews from A to F and provides insights into whether a retailer has removed reviews, a sign that some of the reviews may have been fake or biased. One popular external battery on Amazon, for instance, earned a “D” rating from Fakespot, which determined that fewer than 44 percent of the reviews were reliable.

Consumers can also eyeball reviews on their own for signs of deception. Khalifah says red flags include:

  • A one-day surge in five-star reviews
  • Broken grammar
  • Reviews from reviewers who post hundreds of reviews in one day

It’s not only that companies are faking glowing reviews, but companies are hiring people or using bots to also post fake “bad” reviews for competitors. A sudden rash of 1-star reviews for a product could be a sign of sabotage, for instance.

“We believe the review system is broken,” Khalifah said. “People still don’t realize how much the review system is gamed.”

The Federal Trade Commission is watching, too. On Tuesday it announced its first case against a marketer’s use of phony paid reviews on an independent retail website. Cure Encapsulations Inc. settled FTC allegations it made false and unsubstantiated claims for its garcinia cambogia weight-loss supplement through a third-party website the agency said was paid to write and post fake reviews on Amazon.com.

“When a company buys fake reviews to inflate its Amazon ratings, it hurts both shoppers and companies that play by the rules,” Andrew Smith, director of the FTC’s Bureau of Consumer Protection, said in a statement.

Source: CBS News

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