FTC Sues Over Phony Business Practices Online

Speaking of online reviews, the Federal Trade Commission just moved to settle two cases against businesses it alleged engaged in deceptive acts or practices online.

In the first, the agency alleged the defendants sold fake likes, views, followers, and subscribers on YouTube, LinkedIn, Twitter, Pinterest, and other platforms. And they did not discriminate. They sold to everyone: actors, athletes, writers, musicians, motivational speakers, and all kinds of businesses who wanted to increase their online appeal. The businesses included banks, law firms, software companies, and even other marketing or advertising firms. The defendants did not admit or deny liability, but they agreed to a $2.5 million judgment—sort of—and a ban on selling influence on social media, helping others do it, or misrepresenting any person, product, service, or entity. They must also report their compliance for ten years and keep records for longer.

In the second case, the agency alleged a cosmetics company had its employees create fake online accounts in order to review its own products on a major beauty website. The company told them what to say about which products and to dislike any negative reviews they came across. They also used a virtual private network to conceal their internet addresses. The settlement tells them basically to cut it out. Two of the commissioners dissented because they said that didn’t go far enough.