by Structured Settlement Watchdog®
It’s been clearly documented that some structured settlement buyers have taken the “creative marketing” route a bit too far, rolling out paid video testimonials and even fake print ones—because apparently, nothing says credibility like a script and a hired smile. Some of this theatrical evidence is neatly filed right here.
What does the Federal Trade Commission say about online advertising?
On October 15, 2009, the FTC released its final Guides Concerning the Use of Endorsements and Testimonials in Advertising 16 CFR 255. Essentially,
- Endorsements must be truthful and not misleading.
- If the advertiser doesn’t have proof that the endorser’s experience represents what consumers will achieve by using the product, the ad must clearly and conspicuously disclose the generally expected results in the depicted circumstances.
- If there’s a connection between the endorser and the marketer of the product that would affect how people evaluate the endorsement, it should be disclosed.
The Scottsdale Arizona law firm of Kelly/Warner has done an excellent job of condensing the issue down. They say:
- If there’s a connection between the endorser and the marketer of the product that would affect how people evaluate the endorsement, it should be disclosed.
- It’s common sense to think that if someone is paid to provide a particular statement, they may be biased and the FTC wants to make sure that people understand that. [emphasis added]
Kelly/Warner opines that it’s safe to argue that the one cut-and-dry rule of online testimonials and reviews is that if it’s 100% fake (i.e., you make up a fake news reporter, complete with a picture you pulled off Google images, who claims to have tried the product and lost a significant amount of weight), then it is not compliant. Same thing goes for any paid testimonials if they are not properly disclosed – paid being defined as any material exchange for a positive review.
Some interesting cases
July 14, 2009 Lifestyle Lift, a cosmetic surgery company, settles with the State of New York over attempts to fake positive consumer reviews over the Web. Lifestyle Lift had instructed its employees to “devote the day to doing more postings on the Web a s a satisfied client.” New York Governor Andrew Cuomo, then New York’s attorney general, said in a statement that Lifestyle Lift’s “attempt to generate business by duping consumers was cynical, manipulative and illegal.” Lifestyle Lift was fined $300,0000 in penalties and costs. Read the New York Times article on the story here
August 26, 2010 FTC settles witha vdieo game company that hired a PR firm to post reviews of its in app in the ITunes store “Advertisers should not pass themselves off as ordinary consumers touting a product, and endorsers should make it clear when they have financial connections to sellers”
October 28, 2011 The FTC has filed complaints in US District Court against ten affiliate marketers for allegedly using deceptive marketing practices to advertise the effects of acai berry products for rapid weight loss. The FTC has sought – and in some cases succeeded – to freeze the assets of the affiliate marketers who have been named as defendants in the series of lawsuits
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September 17, 2012 Gartner Group of Stamford CT estimates that by 2014, 10-15% of Social Media Reviews Will Be Fake, Paid For by Companies
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March 6, 2014 FTC Settles with alarm company ADT LLC. over paid testimonials that appeared to be independent and objective reviews on the spokesperson’s own website. Read June 18, 2014 Decision against ADT LLC here
What About Paid Testimonials from Fiverr?
As part of my ongoing investigation I have been able to trace several online testimonials utlized by cash now pushers and settlement purchasers to Fiverr. In addition I have identified one SEO specialist who did work for two cash now pushers who promotes its website using a paid testimonial that appeared to be purchased from fiverr.
Kelly/Warner observes that they regularly see people utilizing paid testimonials from Fiverr. They opine” while you may think that your properly disclosed “paid” video testimonial from a “real” person on fiverr is compliant, be warned that unless the person has actually used the product in question you’re just toeing that line. A testimonial from a person who is not actually a bona fide user of the product, but is making claims about it, may land both you and that person in trouble”.
What about the First Amendment and the Righht to Free Speech?
The Federal Trade Comimssions states clearly “If you are acting on behalf of an advertiser, what you are saying is commercial speech – and commercial speech can be regulated under the FTC Act if it’s deceptive”
Federal Trade Commission (FTC) Frequently Asked Questions
The FTC has also published an FAQ which covers frequently asked questions about the FTC Guide to endorsements