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New FTC guidelines apply truth-in-advertising principles to online reviews

Marketplace Staff Aug 27, 2010

New FTC guidelines apply truth-in-advertising principles to online reviews

Marketplace Staff Aug 27, 2010


Bill Radke: When you can’t decide what to buy, you are no longer on your own. There are so many websites that are rich with user reviews on all kinds of products and places — Yelp and Amazon are just a couple of famous sites. But what if that review is really just a marketing trick? Today, the Federal Trade Commission settled a case that deals with marketers who review their clients’ products online, and funny, they don’t disclose their motives.

Reporter Miguel Helft covers technology for the New York Times. Miguel, welcome to Marketplace.

Miguel Helft: Thanks for having me.

Radke: Tell us about the case that the FTC settled today?

Helft: Well, last year the FTC put on some new guidelines for fake reviews on the Internet and fake blog posts that purport to be from ordinary people, but they are basically written by people who are paid to do those reviews. Yesterday, it settled its first case under those guidelines and it was against a PR company in California that was apparently giving good reviews to its clients, which were mostly game companies that had games on the Apple iTunes store. And they were giving them four and five stars and saying these are great games, and they were not disclosing that they were being paid to do so.

Radke: And what are the rules on that?

Helft: Well, the rules are very similar to what they are in the real world. There’s been guidelines against deceptive advertising for years and the FTC is now enforcing those guidelines on the Internet. But essentially, if you are being paid to pitch a product, you should be up front about it. You know, reviews from users are pervasive online, and so are fake reviews. The question is, it’s challenging for companies to police it, but some companies do a better job than others.

Radke: Well, I don’t think we’re even surprising most listeners when we say that fake reviews are pervasive. It just seems almost impossible to enforce on the net.

Helft: Yeah. I mean, it’s almost impossible for the FTC or anyone else to catch every last one. I think what FTC and the New York Attorney General brought a case last year. What they’re hoping is that by picking a few, hopefully, high-profile cases other people will stop the practice, or at least curtail their efforts to do these kinds of fake reviews.

Radke: Well, are we getting into a fuzzy territory of telling people they can’t puff-up on stuff, they don’t have freedom of speech on the web?

Helft: Well, that’s quite interesting, because when the FTC announced its new guidelines for the Internet and for social media last year, a lot of bloggers were very concerned that they wouldn’t be able to just speak freely or post a tweet saying “I like this thing” or not, that disclosing even tenuous connections. This first case that the agency brought suggests that they’re not going after the casual blogger, who’s referring to a product, but essentially after professionals, who are paid to write fake reviews.

Radke: So what about you, tech reporter for the New York Times? How do you approach that wild world of web opinions?

Helft: Well, I don’t have terribly strict guidelines, but I think one of the things I look for is lots of reviews. So, if an item on Amazon is rated five stars, but there’s only two reviews, I’m going to be a little more suspicious of the reviews, than if there’s 60, 70 or 80 reviews. And that gives me at least a gut level of comfort with it.

Radke: So if marketers want to fool you, they’ve gotta put more time into it and post a whole bunch of reviews.

Helft: That’s right.

Radke: Miguel Helft is a tech reporter for the New York Times. Miguel, thank you.

Helft: Thank you.

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