FTC Cracks Down on Fake Reviews

The First of Its Kind

In a press release this last week, the Federal Trade Commission filed its first case against a company paying for fake product reviews on Amazon, labeling them as fraudulent. A company called Cure Encapsulations, Inc. paid amazonverifiedreviews.com to produce fake reviews to keep the company’s product, garcinia cambogia, a weight loss supplement, above a 4.3 star rating.

A quick settlement was reached with the Cure Encapsulations parent company, Naftula Jacobowitz.  The company will pay $50,000 upfront, and be required to pay unpaid tax obligations. The full amount of the judgement, 12.8 million, will be imposed if the company misrepresented its financial condition to the FTC.

“People rely on reviews when they’re shopping online,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. “When a company buys fake reviews to inflate its Amazon ratings, it hurts both shoppers and companies that play by the rules.”

Channel Signal has written about fake reviews artificially tilting the star rating to very positive, and how it actually hurts a brand, in this blog.

This is great news for Channel Signal, which has a sophisticated system to help filter out the noise and deliver “clean” data to its brand customers.  Channel Signal’s Director of Client Success, Adam Armijo, says “Channel Signal has been fighting the battle of cleaning up data for several years now. With the help of the FTC, both consumers and brands now know that the federal government is watching, and will take action.”

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