Positive online reviews have become essential for any business marketing goods or services over the internet, especially for trendy services like food delivery and custom health product sales. But the FTC’s newly-announced settlement with startup healthy snack service UrthBox reminds marketers that online praise must be freely given, not bought—even if the compensation offered isn’t monetary.
UrthBox, Inc., a San Francisco company offering direct-to-consumer snack deliveries on a subscription model, drew the FTC’s ire by maintaining an incentive program that offered free snack boxes to consumers who posted positive reviews on the BBB’s website. According to the FTC’s complaint, the plan was simple: when a consumer reached out to UrthBox, customer service representatives would offer to send free products to the consumer in exchange for a screenshot of a positive review. The program began with the customer service department at UrthBox, where representatives were paid bonuses based on the number of consumer complaints they were able to turn into positive online reviews. The impact was significant: where UrthBox’s BBB profile had only nine reviews (all negative) in 2016, by the end of the next year, the company boasted 695 reviews, 88% of them positive.
Emboldened by its success with the BBB, UrthBox then expanded its program to apply to reviews on TrustPilot.com and also took steps to begin a nascent influencer campaign without any compliance policies as to the FTC’s endorsement rules. All the while, the FTC alleges, UrthBox’s websites employed sales funnels and checkout pages that failed to comply with ROSCA and improperly signed users up and charged them for recurring shipments of products to which they had never consented. The FTC’s complaint also noted that UrthBox’s compensation practice violated BBB policy that prohibits offers of or actual compensation to reviewers.
Among the crowded world of influencer and negative-option online marketing, UrthBox likely drew the FTC’s particular attention because of the review site it targeted: the Better Business Bureau itself. The FTC and the BBB, as two of the oldest consumer protection entities, enjoy a storied public-private partnership representing both government policing and industry self-regulation. Just as the FTC gives special scrutiny to advertisers who refuse to participate in the BBB’s voluntary arbitration programs like the NAD and CARU, it shows here that it will take a strong stance against companies that, in its view, try to improperly influence the BBB’s online review program.
The Commission’s pursuit of penalties for alleged ROSCA violations and negative-option practices also demonstrates the FTC’s attitude that consumer protection violations rarely occur in a vacuum, and that when a company feels emboldened enough to game the system in one way, it is likely to be similarly offending in another.
For its part, UrthBox was hit with a $100,000 fine and a host of onerous compliance and reporting requirements going forward. Marketers should take note that the FTC’s prohibition of compensated consumer reviews extends beyond influencer marketing and cash payments and includes free samples, bonuses, gifts, and anything of value.