The FTC’s proposed new rules for fake reviews: what does it mean for Amazon Vendors and Sellers?

The Federal Trade Commission (FTC) has proposed new regulations to combat the buying, selling, and manipulation of online reviews. If approved, businesses could be fined up to $50,000 for each fake review a consumer views. However, the rules do not directly hold major review sites like Yelp, Google, Tripadvisor, and Amazon accountable. The Washington Post has a good writeup about the proposed new regulations.

Research estimates that around 30% to 40% of online reviews are fake. The proposed FTC rules target reviews that falsely represent a product or claim to be written by nonexistent persons. Reviews written by company insiders without clear disclosure are also targeted. The regulations also apply to intermediaries who source fake reviews and companies that knowingly pay for them.

Some practices that will be allowed include businesses asking their real customers for reviews and offering them gift cards, provided the customer is not required to express a particular opinion (although this particular tactic is not allowed by Amazon). Shady tactics, such as review “hijacking” (which we’ll cover below) and suppressing negative reviews, are also prohibited.

The FTC’s rules do not, however, address the broader fake-review economy. The regulations do not extend liability to social media or review platforms unless they are directly involved in procuring fake reviews. Neither is there a requirement for sites to verify a user’s identity or product usage.

The FTC’s proposal represents an effort to deter the practice of fake reviews and to protect consumers from being misled. Despite these efforts, there are concerns about enforcement, particularly with businesses based overseas, and the fact that the FTC has no additional enforcement resources.

What This Means for Amazon Businesses

Well… not much. For now, at least.

We always recommend that brands selling on (or to) Amazon stay away from any third-party review-harvesting service, no matter how clearly they state that they’re compliant with Amazon policy. Odds are that they’re not.

Having a critical mass of reviews (at least ten to 15) is essential to your product’s performance on Amazon. Launching a product in a category where your competitors have already amassed hundreds or thousands of reviews can be a challenge, and new brands are often tempted by third-party services that promise you real reviews that won’t be flagged by Amazon. They may even guarantee, or at least imply, that you’ll only get four-star and five-star reviews. And, again, we always caution our clients to avoid the temptation.

The simple fact is that fake or misleading reviews will continue to be a problem. These proposed rules are a good start, but they’re not likely to lead to a significant cleanup on Amazon, because Amazon’s policies are already much stricter than the FTC’s proposed rules. The FTC proposal just puts some teeth into the enforcement, introducing the possibility of civil liability beyond the punishment of being kicked off of Amazon.

The Most Common Types of Problematic Reviews on Amazon

Here’s what we see the most often:

Fake positive reviews: sure, they’re left by real customers, who’ve purchased the product, but they’ve only purchased it because they were paid to. These are the result of shady review-harvesting services. The result is the most glowing, detailed reviews you’ll ever see for the most mundane products of questionable quality. These do a disservice to Amazon customers because they result in poor-quality products having a five-star review average.

Review hijacking: this has become less of a problem as Amazon has taken steps to protect against the practice. It’s done by using the “variation” feature to mislead consumers into thinking a product is well-reviewed, when it’s not. To be clear, simply setting up product variations (or “twisting”) your products is not deceptive. But if you take deliberate steps to leverage the variation feature to mislead your customers, you’re liable to get into trouble. This is what happened to one company which had to pay a $600K fine to the FTC.

The Right Way to Get Amazon Reviews

It’s a common question, but the answer is a bit beyond the scope of this article. We’ll cover that separately.

Parker-Lambert, Amazon, and You

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