The New York Attorney General recently announced a year-long undercover investigation and a series of settlements in which 19 companies agreed to end the practice of writing or paying for fake online business reviews, or "astroturfing." According to the Attorney General's press release, these companies "flooded" websites like Yelp, Google Local, and CitySearch with fake reviews, and hid their identities through IP spoofing techniques, fake online profiles, or the use of freelance writers. Several companies involved in the settlements provide reputation management or "search engine optimization" (SEO) services to brands and business. Others are New York businesses that utilized the services of SEO companies or placed their own ads for freelance writers to write positive reviews. At least one of the businesses, US Coachways, Inc., offered $50 gift certificates to customers to write positive reviews without requiring that the customers disclose the gift in the review. The companies that agreed to discontinue their proliferation or procurement of false reviews include SEO companies like Zamdel, Inc. d/b/a eBoxed, and XVIO, Inc., and local businesses like Laser Cosmetica, US Coachways, Inc., Swam Media Group, Inc. and Scores Media Group, LLC. The companies will collectively pay more than $350,000 in penalties.
Tip: Regulators are turning their attention to online reviews as these reviews have become increasingly influential in consumer purchasing decisions. The FTC's Endorsement Guidelines provide guidance on the requirements for online posts that include an opinion about a product or service by individuals who have received a benefit (directly or indirectly) from an advertiser. In short, any material connection between the person posting a review and an advertiser must be clearly and conspicuously disclosed.