Fake Reviews, Real FTC Action

Advertising Law

In the first case challenging a marketer’s use of fake paid reviews on an independent retail site, the Federal Trade Commission settled with Cure Encapsulations, Inc., and its owner over dozens of phony product reviews posted on Amazon.

According to the FTC, the defendants made false and unsubstantiated claims about their weight loss supplement, Quality Encapsulations Garcinia Cambogia Extract with HCA Capsules, including “Literally BLOCKS FAT from forming,” “powerful appetite suppressant” and “not only BURNS fat, but also keeps fat from forming in the first place!”

In addition, the defendants violated Section 5 of the FTC Act by paying third parties to write and post fake reviews of the product on Amazon, where the supplements were sold. In an email to www.amazonverifiedreviews.com, the defendants informed them that they needed “30 reviews[—]3 per day,” with an average rating of 4.3 stars to maintain sales.

“I am sending you now another $200 and will pay you total of $1000 additional to the cost of the reviews if you stand on the product, and make sure the next 12 days if someone post a negative review you add real positive reviews from real aged accounts (no proxy vpn vps) to make it back to a 4.3 overall,” the company’s chief executive officer wrote. “Please make sure my product should stay a five star.”

The website obliged, posting reviews such as “Wow. I’m actually still amazed that it worked way faster than I expected. I have lost 20 pounds by using these amazing capsules. The pills help you with your intake of food, cleans all toxins from your body and does not allow fat or sugar to stick. Highly recommended!” and “This product really cuts your appetite! I didn’t eat much and I was already feeling full. I used this product for 3 months and I am very glad I did. It helps with weight loss. I really love it.”

Pursuant to the proposed consent order, the defendants are prohibited from making claims of weight loss, appetite suppression, fat blocking or disease treatment for any dietary supplement, food or drug unless they have competent and reliable scientific evidence in the form of human clinical testing.

The defendants must also notify Amazon about the purchased reviews and send an agency-approved email to all purchasers of the supplement to inform them about the FTC’s case, along with a fact sheet from the National Institutes of Health that states “Garcinia cambogia has little to no effect on weight loss.” A $12.8 million judgment will be suspended upon payment of $50,000 and unpaid tax obligations.

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

To read the complaint and proposed stipulated order in Federal Trade Commission v. Cure Encapsulations, Inc., click here.

Why it matters: The message for marketers couldn’t be clearer, the agency emphasized in a blog post about the case: “The use of bills-for-shills product reviews violates the FTC Act.” And the FTC isn’t the only regulator ready to take action over fake reviews—New York Attorney General Letitia James recently announced an enforcement action against a company that allegedly sold “likes” and “views” from fake followers on sites such as LinkedIn, Pinterest, SoundCloud, Twitter and YouTube.