Last week, the U.S. Department of Justice (DOJ), on behalf of the Federal Trade Commission (FTC), and the Illinois attorney general filed a federal lawsuit in the Northern District of Illinois against Premium Home Service (PHS) and its owner. The complaint alleges that the defendants created thousands of online business listings for purported home repair companies and posted fabricated five-star customer reviews associated with those businesses.

On the same day, the Minnesota attorney general filed a parallel action in state court based on similar alleged conduct, underscoring the potential for overlapping federal and state enforcement.

FTC Focus on Online Reviews  

According to the federal complaint, since at least 2018, Illinois-based PHS, allegedly operating as a service broker, created and maintained thousands of online business profiles for home repair companies that did not exist as independent local providers. The complaint alleges that these listings used fabricated addresses and local phone numbers that routed consumers to centralized call centers.

Consumers searching for services such as plumbing or garage door repair were allegedly directed to these listings, where they encountered five-star reviews that regulators claim were fabricated. The complaint further alleges that these reviews were used to influence overall ratings and consumer perception.

When consumers called the listed numbers, representatives allegedly offered either a membership or a one-time service option, with service requests typically outsourced to third-party providers. The complaint also alleges that consumers reported concerns regarding provider qualifications, work quality, and missed appointments. Regulators allege that more than 100,000 consumers paid PHS tens of millions of dollars nationwide.

The FTC and Illinois assert violations of the FTC Act, the FTC’s Reviews and Testimonials Rule, the Gramm-Leach-Bliley Act (GLB Act), and Illinois consumer protection law. The inclusion of the Reviews and Testimonials Rule—which became effective in October 2024—signals the FTC’s intent to use its civil penalty authority in cases involving allegedly fabricated reviews. The complaint’s reliance on the GLB Act, based on alleged misrepresentations used to obtain consumers’ financial information, also reflects a broader approach to pleading multiple statutory bases for relief and use multiple avenues to obtain monetary relief from companies.

The Minnesota attorney general’s complaint alleges violations of the Minnesota Prevention of Consumer Fraud Act, the Minnesota Uniform Deceptive Trade Practices Act, and the Minnesota Commercial Assumed Names Act. It builds on the federal allegations and adds state-specific claims relating to allegedly fictitious Minnesota business identities, unregistered trade names, and the diversion of business from legitimate local providers. Minnesota’s press release acknowledges the parallel FTC action, although it does not explain the basis for pursuing a separate case.

These actions reflect continued regulatory focus on online reviews, business listings, and the broader signals consumers rely on when selecting service providers.

Compliance Risks for Online Service Providers

In particular, the complaints highlight several areas of potential risk:

• Accuracy of business identity and affiliation: Companies should ensure that online listings accurately describe the identity, location, and role of the entity providing the service
• Use of reviews and ratings: The FTC continues to scrutinize allegedly fabricated or misleading reviews, including conduct now expressly addressed by the Reviews and Testimonials Rule
• Lead generation and intermediary models: Businesses operating as intermediaries or using third-party service providers should carefully evaluate how those relationships are presented to consumers
• Multi-agency enforcement exposure: Parallel federal and state actions remain a meaningful risk where alleged conduct affects consumers across jurisdictions

The FTC’s action also suggests that the agency may continue to frame review-related conduct as part of broader deceptive advertising theories, while relying on the Reviews and Testimonials Rule to seek civil penalties.

As enforcement in this area evolves, companies that rely on online presence and consumer reviews may wish to reassess their practices, including oversight of third-party vendors involved in marketing, lead generation, and reputation management.

For more insights into advertising law, bookmark the All About Advertising Law blog and subscribe to our monthly newsletter. To learn more about Venable’s Advertising Law services, click here. And listen to the Ad Law Tool Kit Show—a podcast from Venable.