FTC Cracks Down On Marketing Firm That Put Up Fake Reviews In iPhone App Store

from the review-turfing dept

Fri, Aug 27th 2010 5:10am — Mike Masnick

While lots of us were quite concerned about how the FTC might enforce its seemingly arbitrary new disclosure guidelines, so far, it should be admitted, that the FTC has enforced these new rules carefully. It did, for example, warn clothing retailer Ann Taylor for giving gift cards to bloggers who covered their new line of clothes. That was interesting in that it targeted the retailer, rather than the bloggers themselves -- but was potentially problematic in that blaming a retailer for potential actions of bloggers doesn't seem like correct application of liability. Still, in that case, the FTC only issued a warning.

Now the FTC has announced a settlement with marketing firm Reverb Communications, who was accused of writing fake reviews of apps in the iPhone app store. This FTC action makes sense, as it's clearly a case of someone passing off a review as legit, when it was part of a marketing campaign:

That said, you could argue, at this point, that most people recognize that some percentage of online reviews come from insiders or friends anyway. And, considering that the FTC's explanation for why such rules did not apply to celebrities was that most people understand that celebrities get free stuff all the time, this all seems like something of an arbitrary standard. I don't have a problem with the FTC cracking down on these fake reviews, but it's still not clear that the FTC has an objective standard here, rather than an arbitrary one.

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Filed Under: deception, ftc, marketing, reviews
Companies: ftc, reverb communications

18 Comments

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cc (profile), 27 Aug 2010 @ 5:53am

Fake positive reviews are kind of easy to recognise, so we can make rules to control them.

What about fake negative reviews on competing products, though? Not as straight-forward to make rules to control those.

For example, Grooveshark came up a couple of weeks ago, which is a phenomenal service, even though the industry hates it. If you looks for reviews, you'll see many of them saying "will give you viruses!", even though that can't possibly be true. It's quite clear all of those reviews were written by the same person, and it's to wonder who is *really* responsible for them...
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Dark Helmet (profile), 27 Aug 2010 @ 6:11am

Re:
Grooveseal? After all, they are Groovesharks natural enemy....
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cc (profile), 27 Aug 2010 @ 6:16am

Re: Re:
GrooveRoyScheider maybe?
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A Dan (profile), 27 Aug 2010 @ 6:28am

Re: Re:
I thought the natural enemies of sharks were dolphins?
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cc (profile), 27 Aug 2010 @ 6:33am

Re: Re: Re:
Technically you are right, but seals are funnier.

Narwhals are even better.
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Chronno S. Trigger (profile), 27 Aug 2010 @ 6:38am

Re: Re: Re: Re:
Yeah, but Groovedolphin and Grovenarwhal just don't sound right.
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Dan (profile), 27 Aug 2010 @ 7:06am

Bloggers can't blog because of gift cards?!?
I see a real first amendment issue in with the concept that bloggers can't blog about something recauses they got a gift card from a retailer. What's why the FTC warned Ann Taylor and not the bloggers.
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DirtyTrick, 27 Aug 2010 @ 7:28am

This is serious. How would you like to compete against a company that bribes your potential customers with stock options? The same company has friends write totally false comments about your various products in various blogs. The same company has a reporter fired because he/she says something bad (but accurate)about their product. The same company convinces a well regarded equipment evaluator to run a phony test which makes their product look great and your product look inferior.

Yes, this is all true. The stock option thing was in the Wall Street Journal but nothing happened...
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Don, 27 Aug 2010 @ 7:28am

Magical Apple
Why isn't Steve Jobs cracking down on this; I thought he was the end all and be all of the Apple App Store.
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Reverb, 27 Aug 2010 @ 7:39am

Reverb Statement
Reverb Statement:
During discussions with the FTC, it became apparent that we would never agree on the facts of the situation. Rather than continuing to spend time and money arguing, and laying off employees to fight what we believed was a frivolous matter, we settled this case and ended the discussion because as the FTC states: 'The consent agreement is for settlement purposes only and does not constitute admission by the respondents of a law violation.'

This issue was specific to a handful of small, independently developed iPhone apps that several team members downloaded onto their personal iPhones in their own time using their own money and accounts, a right and privilege afforded to every iPhone and iTouch user. Any iTunes user will understand that each time a product is purchased you are allowed to post one comment per product. Seven out of our 16 employees purchased games which Reverb had been working on and to this the FTC dedicated an investigation. These posts were neither mandated by Reverb nor connected to our policies. Bottom line, these allegations are old, this situation was settled awhile ago and had nothing to do with the clients that many outlets have been reporting. The FTC has continuously made statements that the reviews are “fake reviews” something we question; if a person plays the game and posts one review based on their own opinion about the game should that be constituted as “fake?” The FTC should evaluate if personal posts by these employees justifies this type of time, money and investigation. It’s become apparent to Reverb that this disagreement with the FTC is being used to communicate their new posting policy. We stand by the statement from the FTC that: 'The consent agreement is for settlement purposes only and does not constitute admission by the respondents of a law violation.'
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iamtheky (profile), 27 Aug 2010 @ 8:15am

Reverb has to be the only people who believe reverb responses:

Amazing that they could not find a single flaw in any of the applications. With such early access they would certainly find something constructive to offer the developers...other than fellatio.
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ChronoFish (profile), 27 Aug 2010 @ 8:36am

I don't get it
I fully confess here. I don't get the issue.

Is the issue that suddenly we can't trust bloggers? (Were we ever able to?) Is the issue that bloggers need a disclaimer:

"I'm not a real blogger - I just play one on the Internet".

So a company might have a paid spokes person. Why is this bad?

Don't get me wrong - I "get" that it's a bit underhanded and morally questionable to pretend to be an independent voice when you're really just a mouthpiece.

But I *don't* get why this is a problem for the FCC.

If you open up that can of worms, then just about every PAC would run-afoul of the FCC. FoxNews in it's entirety would would have to change its business model. Now I'm no fan of FoxNews - or of PACS using dishonest names - but really - you want it to be illegal? That's a slippery slope coated with oil on Teflon.

-CF
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ChronoFish (profile), 27 Aug 2010 @ 8:38am

Re: I don't get it
Obviously I made the mistake of referring to the FCC when I should have referred to the FTC....
-CF
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nasch (profile), 27 Aug 2010 @ 8:51am

Re: Bloggers can't blog because of gift cards?!?
According to this rule, they can still say anything they want about it, they just have to also disclose the gift card. But even so, the first amendment issue may very well be why they're not really trying to enforce it as written.
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nasch (profile), 27 Aug 2010 @ 8:54am

Re: Reverb Statement
So the reviews aren't necessarily fake, they just have a glaringly obvious conflict of interest. I don't think that's really any better, since we still can't really trust them.
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nasch (profile), 27 Aug 2010 @ 9:00am

Re: I don't get it
Because it's in the public interest to have this sort of thing at least exposed. You could make your same argument about false advertising:

Sure, it's underhanded and immoral to make up false things about your product and put them in an advertisement, but why is this a problem for the FTC?

The argument is that the public is better off if more of their information is accurate and reliable. I think there's even an argument to be made for economic efficiency. What's better, one enforcement organization policing these issues, or millions of individuals all duplicating the same independent research steps to figure out what information is true?

Even better would be a market solution. Something like Consumer Reports that instead of reviewing products, reviews information. Not sure how that would work though, and obviously the market has not so far taken care of the issue.
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Anonymous Coward, 27 Aug 2010 @ 9:42am

I prefer to know
if the reviewer is a fairly honest geek or a paid whore.

But maybe that's just me.
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Anonymous Coward, 27 Aug 2010 @ 11:16am

Re: Magical Apple
Because this would actually take real skill to engage rather than personal hissy-fits and misguided opinion.
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