False online reviews draw suit from NY
New York Attorney General Andrew M. Cuomo settled with cosmetic surgery firm Lifestyle Lift earlier this month, after the firm allegedly published fake consumer reviews across the Web. This case brings questions of ethical business to light at a time when the Federal Trade Commission is already investigating the use of word-of-mouth marketing online.
Lifestyle Lift employees published positive reviews and comments about the company across various Web sites.
Cuomo's office said in a statement, "These tactics constitute deceptive commercial practices, false advertising and fraudulent and illegal conduct under New York and federal consumer protection law."
Under the settlement, Lifestyle Lift will stop publishing anonymous positive reviews about the company to Internet message boards and other Web sites and will pay $300,000 in penalties and costs to the state.
"Lifestyle Lift regrets that earlier third-party Web site content did not always properly reflect and acknowledge patient comments or indicate that the content was provided by Lifestyle Lift," the company said in a press release, which also assured that it would be compliant going forward.
This ruling is supported by ethical business best practices promoted by the Direct Marketing Association. The association's guidelines say that testimonials and endorsements should be used only if they are "genuine and related to the experience of the person giving them both at the time made and at the time of the promotion."
"This company's attempt to generate business by duping consumers was cynical, manipulative and illegal," Cuomo said in a statement. He added that his office would be "on the forefront in protecting consumers" against fraud such as "astroturfing," online. Cuomo's office defines "astroturfing" as employees posing as independent consumers to post positive reviews and commentary to Web sites and Internet message boards about their own companies.
This case could raise questions about the FTC's investigation into word-of-mouth marketing. Back in April, the FTC released a proposal to revise its Guides Concerning the Use of Endorsements and Testimonials in Advertising, which could make things more difficult for paid bloggers and word-of-mouth marketers who encourage customers to spread the word about products via social networks in exchange for free services.
Under the proposal, bloggers and brands would be held accountable for false statements they make about products in the blogosphere or in a social network. This is an update to existing rules.
"Those who are compensated to promote or review a product using these techniques are not exempt from the laws governing truthful advertising," said Richard Cleland, assistant director, division of advertising practices at the FTC, in a statement.