turf toeWhen I think of Astroturf this time of year I think of football. That probably isn’t true for the New York AG’s office, which has continued its assault on the posting of fake reviews, also known as “astroturfing.” Earlier this month the NY AG announced two more enforcement actions against an urgent medical care facility and a car service. The two actions and the difference in their business models demonstrate that this issue is not going away and that any business type that uses online reviews to help market its product can be at risk. See these prior posts on the AG’s efforts: AG rips up Astroturf; and NY AG targets deceptive endorsements.

According to the AG, the urgent care provider Medrite paid Internet advertising teams thousands of dollars to post favorable reviews on Yelp, CitySearch, Yahoo Local Page, and Google Plus. Medrite also hired freelancers through Craigslist and other sources to post favorable reviews. Medrite did not require that the reviewers actually visit its clinics or that the reviewers disclose that the reviewers were being compensated for their reviews. Both are big no nos in using reviews to market your product.

Continue Reading NY AG Keeps up the Pressure on Astroturfing

astroturfTo many sports fans, Astroturfing means laying down plastic grass especially for use in the multi-purpose stadiums so popular in the 1960s and 70s.  As a playing surface, AstroTurf was known to be hazardous to the bones and joints of those who played on it.  Today, however, the term Astroturfing has taken on a new life in the advertising world.  A recent series of enforcement actions by the New York Attorney General (“NY AG”) demonstrates that Astroturfing in advertising can be as hazardous to those involved as the playing surface was at Veteran’s Stadium.  

In the ad world, Astroturfing refers to efforts to improve a marketer’s online reputation by paying people to post favorable reviews of your product or service on social media.  On September 23, 2013, the NY AG announced agreements with 19 companies imposing more than $350,000 in fines for engaging in Astroturfing.  The companies named include both merchants and search engine optimization companies that provided Astroturfing as part of their services for merchants.  Some of the companies in the crackdown used their own employees, while others hired contractors who tried (apparently unsuccessfully) to mask their identities.  Among the companies named was a licensee of a Scores gentleman’s club franchise, which orchestrated over 175 reviews that were as fake as some of the “attributes” of the entertainers at that establishment.

In announcing the crackdown, the NY AG pointed to research indicating that 90% of consumers say that online reviews influence their purchasing decisions and that increases in ratings on Yelp or similar cites translates directly into increased revenue.  Some predict that by 2014 between 10 and 15% of social media reviews will be fake.

The NY AG maintained that preparing or disseminating false reviews that a reasonable consumer would take to be a neutral third-party review constituted false advertising under NY law.  This approach is similar to that taken by the FTC in its Endorsement and Testimonial Guides and in enforcement actions against Legacy Learning Systems, and Reverb Communications

Readers of this blog already know that paying people to write phony positive reviews about your product or service is a bad idea.  In case there was any doubt, these enforcement actions should remove it.  The harder question faced by marketers is how to disclose more subtle material connections between reviewers or bloggers and marketers such as free samples.  For the answer to that question, we suggest you follow the advice of one on-line reviewer:  “If you have questions regarding advertising law, the lawyers in Venable’s Advertising Group are the best; they are smart, funny, good looking, great at parties, and provide practical advice that marketers can use.”

Astroturf was again in the news last week, but not because the big game whose name we can’t mention was played on synthetic turf. Rather, last week, the office of the NY Attorney General (“AG”) announced it reached a precedent-setting settlement with artificial engagement company Devumi LLC and related companies (“Devumi”) over the selling of fake followers, likes, and influencer messaging (a/k/a “astroturfing”). Venable has been tracking the NY AG office’s assault on similar companies engaged in astroturfing for over five years. According to the press release, however, this is the first finding by a law enforcement agency that the sale of fake social media engagement and the use of stolen identities to perpetuate such online engagement is illegal.

Devumi utilized two types of accounts to carry out its large-scale astroturfing operation. Computer-operated accounts (“bot accounts”) and accounts controlled by one person pretending to be many other people (“sock-puppet accounts”) allowed Devumi to sell fake followers, likes, and other activity across platforms such as YouTube, Twitter, and Pinterest. The social media engagement looked like the real thing—it appeared to express genuine opinions of real people. In fact, some of the fake accounts were derived from copies of real people’s social media accounts, using their photos, profile text, and more—of course, without that real person’s knowledge or consent. Using this façade, the artificial engagement aimed to deceive online audiences and the public.

Beyond the bot and sock-puppet accounts, Devumi also sold endorsements from social media influencers but failed to disclose any material connection. The NY AG office found this “especially troubling,” because the high visibility of influencers and their opinions can translate into appreciable changes in viewers’ opinions and spending habits. These deceptive marketing tactics had consequences on the brand side as well—according to the AG’s findings, Devumi’s astroturfing influenced advertisers’ sponsorship decisions. Interestingly, Devumi even deceived some of its own customers, who mistakenly believed they were purchasing authentic endorsements.

While it is clear that Devumi broke Venable’s golden rules for influencer marketing, that this settlement came from a state law enforcement agency leaves open the question of how this would play out at the federal level. We’ll be sure to continue tracking this issue—stay tuned.

On February 11, 2016, New York Attorney General Eric T. Schneiderman announced four independent settlements related to the use of allegedly deceptive online testimonials and reviews.  These cases reflect continuing concern by the New York Attorney General’s office over “astroturfing” (the posting of fake or otherwise biased reviews).  We wrote about theses enforcement actions previously here.  Even if a company has its own strong policy in place against the use of such reviews, many companies commonly use third parties to facilitate their use of reviews and endorsements. Thus companies should carefully scrutinize what these affiliates do on their behalf.  Continue Reading New York AG Targets “Deceptive” Online Endorsements

Anonymous fake online reviews are back in the news, but this time marketers may not be the only ones who should be wary. As we have written before, astroturf is making a comeback, and not necessarily on the athletic fields. In September 2013, the New York AG agreed to settle  with 19 companies engaging in “astroturfing,” requiring the companies to essentially stop writing their own fake online reviews and pay more than 350,000 in fines.

These fake reviews are particularly attractive to companies that lack a good reputation as they offer a quick fix to their reputation woes. A Harvard Business School study recently asserted that roughly 16% of online reviews are classified as fraudulent, a number which Yelp later confirmed,adding that its fraud logarithm excludes about 25% of reviews submitted. Despite efforts undertaken by companies such as Yelp, some false reviews inevitably slip through the cracks.

But what happens when the roles are reversed and private citizens or competitors slip negative reviews about a company past the goalie in an attempt to hurt the company’s reputation? In a recent case, a company alleged that it was a victim of false attacks in online reviews. In response, the Virginia Court of Appeals held that Yelp must identify the online reviewers accused of defamation. Continue Reading When Anonymous Reviewers Have No Clothes

As we have written before, NAD is using its monitoring of advertising function to bring cases examining native advertising.  And on the eve of the FTC’s upcoming workshop on native advertising the NAD has made its views in this area known again in another monitoring case.

While much of what NAD does is involves competitive, or an occasional consumer, challenge, it also monitors ads to bring its own cases.  Often it has brought cases in product categories like cosmetics where there are relatively fewer competitive disputes.  We have seen this, for example, with the cases NAD has brought against makers of mascara looking at whether celebrity pictures are literal product demonstrations.

In eSalon, NAD expands upon the views on native advertising it expressed in Qualcomm.  Read together these two decisions suggest that NAD is setting a high standard for disclosures.  It will be interesting to see where the FTC eventually comes out on many of these same issues.  NAD’s summary headline perhaps says it best: “Advertisers are required to identify a message as advertising when it appears in a context that consumers may reasonably understand to be editorial in content.” Continue Reading NAD Again Finds Colorable Concerns Regarding Disclosure Obligations in Social Media

Since updating its Endorsement Guides in 2015 to keep pace with the meteoric rise of social media and influencers in marketing, the FTC has placed a significant emphasis on the need to disclose material connections between advertisers and endorsers. Through its Guides, informal business guidance, blog posts, warning letters, and multiple enforcement actions, the FTC has deployed virtually all of the tools in its proverbial tool box to combat what it views as deceptive omissions by influencers who promote goods and services that they are compensated in some shape or form to promote. We’ve blogged many times about the nuances of what constitutes a material connection and how to adequately disclose such connection on social media.

This week, the FTC went back to basics. It announced a settlement with a marketer of weight loss capsules for, among other things, hiring a third-party review site to create and post fake reviews of its product on Amazon to boost its ratings, and thus sales. This is the first such enforcement action by the FTC, although the New York AG has brought several such cases challenging similar conduct.

Customer reviews are critical to distinguishing your product and brand in today’s crowded online marketplace. It’s a good practice to monitor reviews to proactively identify strengths and weaknesses with your products and customer service. When you cross the line to controlling the content by manipulating or fabricating customer reviews, however, it is deceptive. If you’re unsure what you can and cannot do with customer reviews, consult with skilled counsel.

It’s the time of year for reflection and we want to pause and give thanks to each of you for being such loyal readers. In particular, many of you have reached out to us at conferences and other events to tell us how much you appreciate our small little corner of the worldwide web. And while blogging is ordinarily for us a labor of love that sort of encouragement goes a long way on those occasional days when we’d much rather go home and sit on the couch than post another blog.

And now comes the favor part. We were very excited to learn that we made this year’s ABA Journal’s Blawg 100 which makes us eligible to become a member of their blogging Hall of Fame. But to get there we need your votes! We considered several strategies to make that happen. We could pay you to vote but then we’d have to disclose or risk violating the Endorsement Guides. We could offer you a free notebook and in very small print indicate that in accepting this offer you’re also voting for our blog, but there’s those pesky FTC Disclosure guides.  Someone in our marketing department suggested we just submit fake votes, but the NY AG hates astroturfing. Finally we could just say we won but, well, that would be flat out deceptive. So we’re reduced to just asking nice.

If you have a few minutes to vote, click here. You will need to register your email with the ABA Journal (according to their FAQs to prevent voter fraud!) and then you can find our blog under the dropdown menu called Torts/Consumer. You can only lodge one vote per blog but you can vote for more than one blog and so while you’re there we’d encourage you  read and to vote for our friend Rebecca Tushnet’s Lanham Act Blog (43(B)log) in the IP category or her textbook coauthor Eric Goldman’s blog in the Tech category. (They are in different categories, we don’t love Rebecca or Eric that much!) Thanks. And we look forward to another year of blogging.