The FTC recently announced that it has approved a final order to settle charges with AmeriFreight, Inc., an automobile shipment broker. The FTC’s order effectively prevents the company from championing their incredible online reviews without disclosing that AmeriFreight had compensated the reviewers with discounts and other incentives.
According to the FTC’s complaint, AmeriFreight represented that its reviews were those of unbiased customers. However, in reality, AmeriFreight failed to disclose that customers that were rewarded with discounts or other incentives made those reviews. The FTC alleged that AmeriFreight routinely gave consumers $50 discounts if they agreed to review the company’s services online, and increased the cost by $50 if they did not agree to complete the online review. Furthermore, if the consumer agreed to complete an online review, then they were automatically entered to win an additional $100 if their review was selected for a monthly prize. However, if the consumer failed to complete the review they agreed to, AmeriFreight continued to contact the consumer regarding their obligation to complete the online review.
The FTC’s final order bars AmeriFreight from misrepresenting that their “products or services are highly rated or top-ranked based on unbiased customers reviews or that their customer reviews are unbiased,” and requires the company to clearly and prominently disclose any material connection, if one exists, between the company and its endorsers. However, the FTC’s settlement with AmeriFreight does not include any monetary fines.
Even though AmeriFreight has ultimately decided to settle the charges with the FTC, AmeriFreight, through its website, has continued to emphasize that its discount-for-reviews program wasn’t intended to produce false positives. According to AmeriFreight, “The intention has never been to deceive consumers by posting and promoting bogus reviews.” “There was no requirement that reviews needed to be positive only. Compensation was provided for good or bad reviews.” However, the FTC disagreed that because discounts and other incentives were given for both good and bad reviews that somehow AmeriFreight’s conduct was lawful. To the FTC, it doesn’t matter whether the consumers were rewarded for both good and bad reviews, but rather whether AmeriFreight and other similar companies were disclosing the true nature of the consumers’ online reviews.
Since at least 2009, the FTC has published guidelines explaining that bloggers and other online writers need to disclose when they’re being compensated for writing about particular products or services. The agency’s 2013 online advertising guidelines explain that disclosures about getting payments, discounts, or free products need to be “clear and conspicuous.” Even still, AmeriFreight did not heed the FTC’s guidelines. In the FTC’s view, AmeriFreight deceived its customers by claiming it had “more highly ranked ratings and reviews than any other company in the automobile transportation business,” because it had implied those were “unbiased reviews,” when in fact they weren’t.
The case against AmeriFreight is significant because it signals loud and clear to those providing online reviews of their products that they must “clearly and conspicuously” disclose the nature of the compensation being provided to those consumers reviewing the company’s products. Furthermore, it is not enough for a company to argue that their conduct is lawful based upon the sheer fact that consumers were rewarded whether their online review was positive or negative. The FTC’s focus is not on the content of the review. Rather, the FTC is concerned with the company’s failure to disclose that reviewers were compensated fin any way or their reviews, and the company’s conduct in touting those reviews as highly ranked or otherwise. Accordingly, companies providing online reviews must heed the FTC’s settlement with AmeriFreight, and should undoubtedly take care to disclose the nature of the compensation being provided to those consumers reviewing their products online. If not, they may find the FTC saying “No” to their discounts for consumer online reviews.