Legal Guide For Amazon Sellers And Marketers
Kelly / Warner works with Amazon sellers and affiliates. As a result, our attorneys often field questions about the legalities of online consumer reviews.
- Is it possible to get bad reviews removed from Amazon?
- A competitor left a bad review on my page? Is that legal?
- Can I uncover the real name of anonymous reviewers?
- What laws are at my disposal to combat unfair competition?
We've put together this legal guide as a resource for Amazon FBA and FBM e-tailers. Here, you'll find answers to the above questions, plus additional information about the laws and regulations that affect Amazon sellers and marketers. Bookmark and check back every month. If you want to consult with an Amazon.com business lawyer, get in touch.
Online Review Issues
Live By The Star: The Importance of Consumer Reviews
Perhaps journalist David Streitfeld said it best in his 2012 article "The Best Book Reviews Money Can Buy":
"In many situations, [online reviews] are supplanting the marketing department, the press agent, advertisements, word of mouth and the professional critique."
Nearly Everybody Reads -- and Trusts -- User Reviews
Streitfeld's right. These days, e-tailers live and die by the star.
A recent PriceWaterhouseCoopers study concluded that 88% of North Americans research products online before buying. Couple that stat with another fact: the cost of banner advertising has nearly doubled over the past five years.
Marketing Overload = User Review Reliance
Every day, the average person is bombarded by over 6,000 marketing messages. We've gotten so used to them that we've become talented at tuning them out. That's why 99% of us head straight for the comment section -- swiftly bypassing any traditional advertising on the way down -- when we're considering buying something online.
The Importance of ASR on Amazon
On Amazon, there's also a technical significance attached to a star-review rating. It involves something called the ASR, or Amazon Sales Rank. A seller's ASR does double duty:
- It acts as a quasi-quality indicator. The higher a seller's ASR, the more likely a customer is to trust said seller.
- It can affect where one's product shows up in Amazon's search results. Though it can't be 100% verified, since the ASR algorithm is and Amazon trade secret, it's assumed that the higher the ASR, the higher the SERP position.
What do all these stats and facts ultimately mean for many Amazon sellers? Simply stated: A 5-star rating can mean the difference between having a roof over one's head and food on the table -- or not. A 1-star rating could mean a threat-level red catastrophe.
How To Spot A Fake Review
In her book The Discourse of Online Consumer Reviews, Dr. Camilla Vasquez outlined several tell-tale signs of a fake review. Of course not every review that has one or more of these characteristics is a fake review, but if you notice a pattern, it may be an indicator that everything isn't as straightforward as one might assume. Vasquez advises:
Other characteristics reviews that may indicate a fake review:
- Very Short or very vague;
- Overly Passionate (A Cornell University study discovered that fake reviews tend to use more superlatives than genuine reviews.);
- Self-referential (The same Cornell study concluded that phony and paid reviewers tend to use the words "I" and "We" more often than real reviewers.);
- The reviewer attacks a product or book as "pathetic, ridiculous or a waste of time / piece of trash," then provides an allegedly superior alternative - usually with a link.
Who writes fake reviews:
- Customers Getting a Kickback
- Professional PR People
- Content Writers
FTC's Stance On Fake Reviews
In the United States, the Federal Trade Commission acts the nation's "consumer watchdog." Its mission is to rid the country of unscrupulous business practices -- namely, "unfair and deceptive marketing". A quasi-governmental office, commissioners are appointed, but enjoy autonomy.
Unfair Competition and Compliance
Common Competitor Tactics Used Against Amazon Sellers and Marketers
Since reviews and ratings are the backbone of an Amazon storefront, proprietors do everything in their powers to get and retain high marks. Some people stay far away from the illegal line and don't solicit reviews - good or bad. They let the chips fall where they may, concentrate on the quality of their products or books, and focus on customer service.
Another set of Amazon entrepreneurs dances closer to the legality line. This group actively and creatively solicits positive reviews. The operative word being "creatively". While some of their tactics may raise Pollyanna's eyebrow, technically, they're operations buoy above illegal waters.
And then there's the third group. The sneaky set that is willing to risk legal censure - and in some cases public shaming -- for the sake of sales. These are the people who aren't ashamed to play dirty and do things like:
|Illegal Tactic||Possible Legal Remedy|
|Write - or pay other people to write - negative reviews on competitors' products and pages in an effort to eliminate the competition;||Defamation, Unfair and Deceptive Marketing|
|Posting unfair criticism on a competitor's page;||Trade Libel, Defamation|
|Use destructive software that messes with competitors' rankings;||Computer Fraud and Abuse Act|
|Fake counterfeit and copyright complaints in order to remove rivals;||Lanham Act, FTC Act, State Intellectual Property Laws|
|Crossing the copyright line by infringing on a competitor's brand;||Lanham Act, State Trademark, Copyright and Tortious Interference laws|
|Drain the Pay Per Click budget of rivals by clicking on their ads.||FTC Act, Unfair Competition|
A Note About Re-pricing Software
Some online sellers use repricing software. It tracks the prices of competing products and can be set to automatically update your pricing.
For example. Let's say that Jane X is selling Widget Y. John X is also selling widget Y. John uses repricing software. On Monday, both Jane's and John's widgets are priced the same. In the hopes of gaining an edge, Jane lowers her price by 50 cents. John's repricing software is alerted that Jane lowered her price and automatically lowers his by 51 cents, so he's cheaper than Jane by 1 cent.
This type of activity is not illegal. Many people think it is, but it's not. It's textbook competition and 100% legal.
The Dot Com Disclosures
One of the FTC's main directives is offering guidelines on what is and is not acceptable marketing behavior. Considered the Bible of online marketing law, the Dot Com Disclosures are a set of regulations regarding proper Internet advertising procedures. Amongst a host of other online marketing guidelines, the Dot Com Disclosures condemn paid and fake reviews.
The document makes clear that phony ratings and reviews fall squarely into the "unfair and deceptive" category, and taking part in the activity could result in a hefty fine - so hefty it could bankrupt you.
The DCD also states that any and all material connections must be made clear in online endorsements (including Amazon reviews). But, can the FTC, realistically, enforce the "material disclosure" clause on every person who has ever written an online review? Of course not. For starters, the FTC's stated goal is to protect consumers, so they can't very well start going after the very people they've vowed to protect. Secondly, it's not fiscally practical to legally hound individual reviewers.
So, what does the FTC do? They go after flagrant violators. The people who set up networks of fake reviewers, not the individual pay for hire typers.
But that doesn't mean that individual Amazon e-tailers can't use the legal system to stop an unscrupulous competitor in their sneaky tracks. Oftentimes, it only takes a single letter from an attorney to turn things around and alert your foe that you aren't to be trifled with.
Go here to read about legal options for Amazon sellers dealing with a dastardly competitor who is engaging in illegal activities.
FBA-Related Laws & Amazon's History
Trademark Infringement: Lanham ActSigned into law by Harry Truman, the Lanham Act is the nation's primary trademark law. It outlines the parameters of trademark infringement, trademark dilution and false advertising. Due to amendments, the Lanham also governs trademark counterfeiting and cybersquatting legalities.
Like all laws, the Lanham Act (and associated Case Law) is nuanced and precise and full of exceptions. But the gist of the law is this:
- The unauthorized -- and ultimately profitable -- use of a trademark (outside of fair use allowances) is illegal;
- Trademark holders have a legal right to the domain name of their trademarks. (i.e., Nike Inc., by default, has a legal right to Nike.com. A cybersquatter can't hold Nike.com hostage and make the company pay them 1 Billion for it.
- Illegalizes the importation of products that infringe on, or are dilutive of, a registered U.S. trademark.
- Lays down the rules for trademark registration, disallowing for the registration of marks or brand names that are:
- Confusingly similar to another mark or brand;
- Generic or merely descriptive (i.e., "cookies for an actual cookie company")
- Scandalous or immoral (A relic from the 1940s when the act was first ratified)
- Declares that any commercial / marketing activity that is likely to cause marketplace confusion is against the law, and then delineates
various things that qualify as "confusion causing" like:
- False designations of origins
- False descriptions
- Misleading descriptions or representations of fact.
Unfair Competition Torts
Unfair competition is not a single law. Think of it more as a top-level legal category under which various torts fall. Although there are dozens of torts that could fairly be categorized as unfair competition torts, there are four most often used by Amazon sellers and marketers are: Defamation, Product Disparagement, Trade Libel, and Tortious Interference.
From Cadabra to Amazon
Amazon founder Jeff Bezos originally registered the company as Cadabra.com. But by launch date, the named had been changed to Amazon. Why Amazon and not Cadabra? Bezos and co. realized that Cadabra sounded too much like Cadaver. Besides, if the company's name started with an A, it would sit at the top of most lists - an old-school marketing trick. Also, the Amazon River was huge, and Bezos wanted his e-tailing business to be huge.
And he got his wish. Within Amazons first two months, Amazon was pulling in $20,000 a week. One of the few companies to have survived the dot-com bubble burst of the early 2000s, Amazon has gone on to become North America's largest online retailer.
Largest Online Review Site
In many ways, Amazon.com runs on its reviews. As one of the first Internet portals to feature "unchecked" consumer feedback, by 2010, Amazon was named the "largest single source for Internet reviews."
Of the site's user review structure and policy, Bezos famously once said that they opted to keep the negative reviews up to "let the truth loose."
But are those reviews really the truth? Or have reviews become a new form of "native advertising"? Are reviews the new roadside billboard? Should we assume that most reviews are written by interested parties - both positive and negative? Not all reviews are fake, but quite a few are. The trick to navigating today's marketplace is developing a savvy eye for fake reviews. For sellers, the trick is knowing your legal arrows in your quiver and when to shoot them.
How To Make Money On Amazon
When Amazon first hit the scene, it was the one and only retailer. But as the platform grew, it morphed into a DIY Marketplace that allowed anyone with an Internet connection to try their hands at e-tailing. Today, people can make money, via Amazon, in three ways:
- Work for the company or partner with the company;
- Become an online affiliate for Amazon.com;
- Set up and manage an Amazon store, or make use of one of Amazon's commission-generating many apps and plugins.