Charges Settled Over Fake Reviews on iTunes (New York Times)
We have been away for the last few weeks on a long overdue vacation, but we are now back with a story about promotion and marketing law. This issue is one we first examined last October when we discussed how the U.S. Government was intending to take a more critical view of supposedly unbiased product endorsements that are actually company-sponsored promotions. In particular, the Federal Trade Commission (FTC) announced they would become more aggressive monitoring what goes on at product review websites. Their main concern is with marketers deliberately financing the posting of positive product comments, including product reviews, but failing to disclose the business relationship the poster has with the product or company they are reviewing.
The FTC made it clear they will go after marketers who do not disclose such relationships as part of their postings. According to the new guidelines, it is not illegal to pay for positive reviews as long as it is evident to anyone reading the post that the poster was compensated or has a relationship with the product or company.
Last week the FTC took their first significant action on this issue. They settled charges brought against a California public relations company who agreed to remove positive reviews they posted to iTunes. The FTC had alleged the PR company used employees and interns to post positive reviews for clients’ products.
The charges were the first to be brought under a new set of guidelines for Internet endorsements that the agency introduced last year. The guidelines have often been described as rules for bloggers, but they also cover anyone writing reviews on Web sites or promoting products through Facebook or Twitter.
Should this work the other way as well? Should marketers be legally required to identify whether they intentionally post a negative comment for a competitor’s product?
Image by premasagar