Enforcement Action

Concluding what it called Operation Clean Turf, the New York Attorney General's office announced that it has levied $350,000 in penalties against 19 businesses for astroturfing -- planting fake consumer reviews on social media review websites to improve reputation and increase business.

Companies paying fines include eBoxed and XVIO, both Search Engine Optimization (SEO) firms that offered to deliver glowing and fake customer reviews to their advertising clients on sites such as Yelp, Google + and TripAdvisor. Other entities paying fines range from a laser-hair removal service to a regional bus company to an adult nightclub.

Click here for full press release.

The Law: Testimonials & Endorsements

It should come as no surprise that astroturfing is illegal under the laws of many states as well as federal law. Indeed, regulations updated by the Federal Trade Commission (FTC) in 2009, reiterated rules for endorsements and testimonials, including that they must be true and not misleading and that the reviewer must disclose any payment or other consideration provided in exchange for the review. See here.

Takeaways and Checklist for Businesses & Advertisers:

  • Don't write fake reviews. And don't ask your friends or family to do so either.
  • In a policy or handbook, prohibit employees from posting fake reviews or using a false identity online to promote the business (or criticize competitors). An overzealous employee can be your biggest liability.
  • It is OK to ask customers to write positive reviews online. But don't pay them.
  • Don't offer discounts or free goods/services in exchange for a positive online review.
  • If you work with an SEO or advertising agency, include in your contract a requirement that they will follow all applicable laws including advertising laws. And require the Agency to defend and indemnify you for any violation. Otherwise, you could be liable for the agency's astroturfing on your behalf.