Customer feedback is a two-way street.  On the one hand, positive customers reviews can inspire trust in potential new customers who might otherwise be apprehensive about purchasing products or services from an unfamiliar company.  Negative reviews, on the other hand, typically have the opposite effect.  As such, businesses may be tempted to stifle or “bury” negative customer feedback in order to preserve their reputation.  Businesses that engage in such complaint suppression tactics, however, run the risk attracting the ire of federal enforcement agencies.

For example, just last week, a federal court ruled that the Federal Trade Commission (“FTC”) is likely to prevail in its case against World Patent Marketing, Inc. (“WPM”), a business that has marketed and sold research, patenting, and invention-promotion services to consumers since 2014.  According to the FTC, WPM intimidated and threatened customers to prevent them from complaining and to compel them to retract complaints, often through cease and desist letters from WPM’s lawyers frivolously insisting that such conduct constitutes unlawful defamation or even criminal extortion.

The court agreed with the FTC that WPM’s tactics likely violate Section 5(a) of the FTC Act, which proscribes any unfair act or practice that “is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition.”  The court explained that complaint-suppression tactics like those employed by WPM cause substantial consumer injury “because they serve to limit the flow of truthful information” about the quality of a business’s services to prospective consumers, making it “nearly impossible for consumers to make informed decisions.”

The court also found that there are no countervailing benefits to such tactics, as “existing customers do not benefit from having their complaints suppressed and prospective consumers do not benefit from being denied access to material information.”  To the contrary, suppressing customer complaints in this manner permitted WPM  “to hinder competition and harm legitimate competitors in the marketplace.”

This case highlights a need for businesses to take special care when responding to customer complaints and negative online reviews.  However damaging a bad Yelp review may be for your business, getting sued by the federal government is certainly worse.

Retailers often use product reviews to supplement advertising and drive sales.  Such use has become more prevalent as sales shift from brick and mortar stores to internet sales, where splattering a webpage with purported product reviews is easy, cheap, and grabs eyeballs.

Online product reviews
Copyright: martialred / 123RF Stock Photo

Many major online retailers offer product reviews submitted by consumers. Many online retailers will provide product reviews on their website that the company has solicited or otherwise selected for favorability. Such reviews are supposed to be authentic and accurate. While the retailer can select which reviews are displayed, the reviews should be real and the consumer can decide how much weight to give a review.  However, purported third party website reviews exist for the specific reason that they are supposed to be independent and will give the good and the bad. Several companies and individuals recently discovered that faking a third party review website will result in action from the FTC.

The website of Trampoline Safety of America purported to use experts to give safety ratings to different trampoline brands, rating those made by Infinity and Olympus Pro the highest.  However, what was not disclosed to consumers according to the FTC was that Trampoline Safety of America was operated by Infinity and Olympus Pro and the company owners.  According to the FTC the comments and videos on the website were also not authentic customer reviews, but were created by the owners of Infinity and Olympus Pro.  Following FTC action, the parties are heading toward settlement.

While such conduct is obviously improper, it is important always to disclose conflicts regarding product reviews and to only use consumer reviews or testimonials that are actually given by customers.  All factual claims, especially medical related claims, must be supported by actual data or testing.  Not only has the FTC shown a willingness to crack down on companies that violate such requirements, consumer protection lawyers and competitor companies can also be expected to bring claims and seek damages.