Reviews, Incentives and the Law
December 08, 2016
In an effort to gain visibility in Google search, some businesses have made a mad rush to solicit and acquire more online reviews. In fact, we frequently get asked by businesses how they might go about implementing incentives to increase review counts. What many business don’t realize is that instead of helping their business, they might be putting it in position sink.
Apparently these businesses didn’t get the memo that if they cut too many corners and take a “damn the torpedoes” approach that there is a good chance that they will be violating pay to play laws and FTC rules concerning reviews and testimonials.
Enforcing The Law On Review Incentives
In some states, the days of review incentives not making the radar for regulators are changing. In New York State, a leader in regulatory enforcement, these behaviors have brought repeated scrutiny and heavy fines.
Earlier this week, the NY State Attorney General Schneiderman, under the umbrella of his Operation Clean Turf program to identify review abusers, dealt significant fines to two NY State businesses; MedRite Care for $100,000 and to the car service company Carmel for $75,000.
In the case of MedRite the fine was for buying reviews from users that have never visited. The case came to NY State’s attention in early 2014 when Yelp slapped a consumer alert on their listing.
MedRite paid internet advertising companies thousands of dollars for reviews on several different consumer-review websites. For example, in September, 2012, Medrite paid an internet advertising company $375 to post 15 positive reviews on Yelp.com, CitySearch, Yahoo Local Page, and Google Plus. Medrite also hired several free-lance writers through the Internet, including with job postings on Craigslist.com, to write positive reviews for $10 to $15 per review. One writer responded to Medrite’s listing for Yelp reviews, “Send me your business name and I will give you a good review. I have been on yelp for 4 years and have more than 160 reviews already.” Another writer responded, “Hello I saw your ad on craiglist and I would like to post a positive 5 star review for your business… .”
Medrite never required that the reviewers visit its facilities and experience its services, and never required the reviewers to disclose that they were paid for the review. Pursuant to the settlement, Medrite is prohibited from misrepresenting that an endorser is an independent user of the product or service being promoted. Medrite is also prohibited from compensating a reviewer who has not made the required disclosures.
A $10 Discount Incentive For Reviews Results In A Crash
Earlier this year Carmel, a well-known car service based in New York City sent out 161,000 email messages to Carmel customers requesting feedback regarding their recent ride.
Customers were asked to evaluate Carmel services by clicking “Perfect” or “Good,” listed with an opportunity for ten dollars ($10) discount off the next ride, or “Bad,” which did not offer any discount. Upon clicking the “Perfect” and “Good” links, the customer was directed to a consumer-review website such as Yelp.com and provided a $10 discount off their next ride upon confirmation of the review. If a customer clicked on the “Bad” button, he or she was directed to a web portal at Carmel with the opportunity to leave feedback. However, in this case, they were not directed or otherwise told to post the review on a consumer-review website and were not offered a discount or any other form of compensation.
Paying for a positive review without disclosing the payment would lead a reasonable consumer to believe that the review was a neutral, third-party review. Incentivizing customers to provide favorable reviews without disclosing such payments is a form of false advertising and a deceptive trade practice, and it violates New York Executive Law § 63(12), New York General Business Law §§ 349 and 350, as well as the FTC Endorsement Guidelines.
This is the second enforcement effort this year in NY State and the third in 3 years. The fines are also increasing significantly over previous violations.
Interestingly at Yelp Carmel shows 1311 reviews and a 2.5 rating and at Google 573 reviews with a 3.78 star rating. At both sites it appears that many of the incentivized reviews made it through. And while the numbers of reviews are impressive, in the end the cost has turned out to be very high.
Optimize Your Business First
While it may seem like having 500 Google or Yelp reviews is the most important thing in the world to get right now, what is really important is spending that energy making your business better and earning reviews rather than trying to buy them.
NY State is currently more aggressive than many state’s attorney generals. We think though that they are at the forefront of an enforcement trend and with the rising reliance that consumers have on reviews you can expect more enforcement from both state and federal authorities.