Company Failed to Disclose It Gave Discounts and Awards to Customer Reviewers
AmeriFreight, an automobile shipment broker based in Peachtree City, Georgia, has agreed to a settlement with the Federal Trade Commission that will halt the company’s allegedly deceptive practice of touting online customer reviews, while failing to disclose that the reviewers were compensated with discounts and incentives.
The FTC’s complaint marks the first time the agency has charged a company with misrepresenting online reviews by failing to disclose that it gave cash discounts to customers to post the reviews.
“Companies must make it clear when they have paid their customers to write online reviews,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “If they fail to do that – as AmeriFreight did – then they’re deceiving consumers, plain and simple.”
AmeriFreight is an automobile shipment broker that arranges the shipment of consumers’ cars through third-party freight carriers. Its website touted that the company had “more highly ranked ratings and reviews than any other company in the automotive transportation business.” As part of its advertising, it encouraged consumers to “Google us ‘bbb top rated car shipping.’ You don’t have to believe us, our consumers say it all.”
According to the FTC’s complaint, AmeriFreight and its owner, Marius Lehmann, violated Section 5 of the FTC Act by failing to disclose that they compensated consumers for their online reviews. Specifically, according to the complaint, the respondents:
- Provided consumers with a discount of $50 off the cost of AmeriFreight’s services if consumers agreed to review the company’s services online, and increased the cost by $50 if consumers did not agree to write a review;
- Provided consumers with “Conditions for receiving a discount on reviews,” which said that if they leave an online review, they will be automatically entered into a $100 per month “Best Monthly Review Award” for the most creative subject title and “informative content”;
- Contacted consumers after their cars had been shipped to remind them of their obligation to complete a review to receive the “online review discount,” and qualify for the $100 award;
- Failed to disclose the material connection between the company and their consumer endorsers -- namely, that AmeriFreight compensated consumers to post online reviews;
- Deceptively represented that its favorable reviews were based on the unbiased reviews of customers.
The proposed order settling the FTC’s charges prohibits the respondents from misrepresenting that their products or services are highly rated or top-ranked based on unbiased consumer reviews, or that customer reviews are unbiased. It also requires the respondents to clearly and prominently disclose any material connection, if one exists, between them and their endorsers.
The respondents also must maintain records of their advertisements and other relevant documents, and must deliver copies of the order to company principals, officers, directors, managers, employees and others. Finally, they must notify the FTC about any changes in corporate structure or affiliation with new businesses that could affect their compliance with the order, which will expire in 20 years.
Information for Consumers
The FTC has information for consumers about how to detect and avoid advertisements that may be deceptive or misleading, including specific information on endorsements and testimonials.
The Commission vote to accept the proposed consent order for public comment was 5-0. The FTC will publish a description of the consent agreement package in the Federal Register shortly. Interested parties can submit comments electronically by following the instructions in the “Invitation to Comment” part of the “Supplementary Information” section. The agreement will be subject to public comment for 30 days, beginning today and continuing through March 31, 2015, after which the Commission will decide whether to make the proposed consent order final.
NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $16,000.
The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.
Mitchell J. Katz
Office of Public Affairs
Bureau of Consumer Protection