Paid Online Reviews Cost Companies $175K

Two companies have settled with the New York Attorney General’s Office after being accused of paying consumers for positive reviews by agreeing to increase their transparency and pay a total of $175,000.

MedRite Care, LLC, a medical emergency care service, paid thousands of dollars to Internet advertising companies and freelance writers over a two-year period for posting positive reviews of the company on sites like Yelp. The reviewers neither visited MedRite facilities nor experienced its services, the AG said, and never disclosed they were paid for the reviews.

In September 2012 the company paid $375 for 15 positive reviews on sites such as Yahoo Local Page, and followed with job postings on Craigslist offering $10-$15 for positive reviews on Yelp. When Yelp discovered that MedRite was using the site to solicit reviews (one e-mail to a Yelp member read, “I see you are yelping a lot. I own a company in nyc and would like to get more reviews ... would you come checkout our company and write a review? (will pay).”), Yelp posted a “Consumer Alert” on MedRite’s Yelp profile.

Similarly, car service company Carmel provided a $10 discount to clients who posted a positive review online. Between May 5, 2016 and July 27, 2016, the company sent 161,000 e-mail messages to customers requesting feedback about their experience. Customers were presented with three choices to describe their service: “Perfect,” “Good,” or “Bad.” Those who clicked the first two options were directed to a consumer review website and provided with a $10 discount off their next ride with Carmel upon confirmation of the review. Those who chose the “Bad” option were not connected with a review website or rewarded with a discount, the AG said.

The companies violated both the Federal Trade Commission’s Endorsement Guides and New York state law, which prohibits misrepresentation and deceptive acts or practices in the conduct of any business, according to Attorney General Eric T. Schneiderman.

The companies will pay $100,000 and $75,000, respectively (although MedRite’s fine was partially suspended to $50,000 based on inability to pay), and will no longer engage in such practices. MedRite is prohibited from misrepresenting that an endorser is an independent user of its services or compensating a reviewer who has not made the required disclosures. Carmel also promised to educate the for-hire car transportation industry on false advertising law and online consumer reviews by taking out a full-page ad in trade newspapers and conducting educational seminars.

To read the AG’s Office’s press release about the settlements, click here.

Why it matters: These actions are a continuation of the AG’s efforts to ensure accurate and reliable consumer reviews, an effort that began with “Operation Clean Turf” in 2013, the AG’s Office said in a statement. “Consumers should not be misled when it comes to making important determinations about their health and well-being,” Attorney General Eric T. Schneiderman said in a statement. “Our investigation into MedRite sends a strong message to companies that the rules preventing deceptive advertising and practices must be upheld online. Those same rules apply to other service industries.”



pursuant to New York DR 2-101(f)

© 2024 Manatt, Phelps & Phillips, LLP.

All rights reserved