Company Settles with FTC for $250,000 Over Misleading Online Reviews


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A company that sells guitar-lesson DVDs online has settled with the Federal Trade Commission for a whopping $250,000 over charges that the company “deceptively advertised its products through online affiliate marketers who falsely posed as ordinary consumers or independent reviewers”. The company supposedly schemed to have fake positive reviews posted online.

According to the FTC, Legacy Learning Systems “disseminated deceptive advertisements by representing that online endorsements written by affiliates reflected the views of ordinary consumers or “independent” reviewers, without clearly disclosing that the affiliates were paid for every sale they generated.”

This is another example of why companies need to be extremely careful when it comes to online reviews and any reviews of their product or service that are supposedly “unbiased”. You can get into serious trouble–financially–if you or anyone you do business with, such as your affiliates, post false and misleading reviews online.

The Federal Trade Commission recently started cracking down on misleading and false online reviews. The FTC has revised their guidelines on endorsements and testimonials. These new guidelines were issued in 2009, and they explain in general terms when the FTC may find endorsements or testimonials unfair or deceptive.

Under the Federal Trade Commission guidelines, “a positive review by a person connected to the seller – or someone who receives cash or in-kind payment to review a product or service – should disclose the material connection between the reviewer and the seller of the product or service.”

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