FTC Fines Company for Fake Reviews

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The Story

The Federal Trade Commission has fined Legacy Learning, maker of instructional DVDs, $250,000. Legacy's affiliates are paid commission when consumers buy Legacy products. The complaint accuses these affiliates of writing misleading reviews to encourage consumers to buy the products. In these reviews, the affiliates failed to state that they were paid by Legacy. The ruling follows FTC Guides, updated in 2009 to apply to testimonial advertisements and bloggers, particularly for social media outlets. 

FTC Complaint 
 Discussion Starters

  • To what extent do you currently rely on reviews and other online posts when deciding whether to buy a product?
  • How do you decide whether an online post is credible?
  • Read the above summary of the FTC complaint (posted by the Bureau of Consumer Protection blog, a government website). After reading the sample reviews in the summary of the complaint, do you believe the FTC Guides are appropriate? Is the fine fair? Why or why not?

Assignment Ideas

  • Write a letter to small businesses in your community to warn them about this issue. How will you explain the FTC ruling and encourage business owners to operate within the Guides?
  • Working in small groups, identify criteria to determine the credibility of an online review.  How can you assess objectivity? Or, what clues might tell you that a review is not objective?