Amazon Sues Over Fake Reviews: FBA News

Picture of fake dollar bill to accompany a blog post about Amazon sues over fake reviews

Amazon Does Not Suffer Fools Fake Reviews

Amazon sues over fake reviews, and actively engages courts to enforce its “zero tolerance” stance. Recently, the company filed yet another lawsuit against several phony feedback facilitators.

Amazon Sues Over Fake Reviews

In the past year alone, the online retailer has already sued hundreds of businesses and individuals who create and deploy fake reviews. (You can read about other instances here, here, and here.)

Why Does Amazon Hate Fake Reviews?

Amazon — (and the Federal Trade Commission, for that matter) — views fake reviews as an act of unfair competition. Or, in legalese, buying fake reviews violates Section 5 of the FTC Act because the practice qualifies as an intentional attempt to mislead consumers.

Amazon explained its position to TechCrunch

“Our goal is to eliminate the incentives for sellers to engage in review abuse and shut down this ecosystem around fraudulent reviews in exchange for compensation. As long as this type of abuse exists, we will continue to take enforcement and legal action against sellers participating in fraudulent reviews.”

Discount-For-Review Programs Are Also Against Amazon Policy

The news comes in the wake of Amazon’s announcement to purge the site of incentivized reviews (exception: books).

What does this mean for e-commerce entrepreneurs? In all probability, traditional advertising will make a triumphant comeback.

Is Amazon Hamstringing Startups?

In addition to investor cynicism, Amazon’s recent crackdowns have sparked a concern flame in the e-commerce industry. Is Amazon, in a way, raising the barrier of entry way too high, by ultimately forcing startups to outlay a larger initial marketing spend?

Fake Reviews v. Discount-For-Reviews: Both Are Now No-Nos on Amazon

What is the difference between fake reviews and discount-for-review programs? The former conspicuously violates Federal marketing regulations; the latter is (perhaps, it’s now more accurate to say, “was”) an enormously helpful startup marketing tool — which also spawned an entire promotional services niche, feedback facilitation.

Or, to put it simply: discount-for-review programs helped grow the online business economy.

Difficult But Necessary?

On account of Amazon’s no-holds-barred approach to exterminating solicited reviews, a big e-commerce question now looms: Do Amazon’s actions fall into the “difficult-but-necessary” category? Did company quants crunch numbers and discover that its third-party selling programs were ballooning at a breakneck — and unsustainable — speed, flooding the platform with potentially problematic digital detritus?

Because here’s the thing: Amazon is currently the top-dog, and as such, greatly exposed. It must be careful. Other online retailers are patiently crouching in the tall weeds, waiting for the perfect opportunity to pounce — and that opportunity could be Amazon’s deteriorating respectability. After all, if the platform becomes synonymous with counterfeit goods and phony reviews, the public will start to look elsewhere.

Adjust To Survive

Now, does all this news spell doom and gloom for FBA sellers? No. Surviving amounts to adjusting. Brands and marketers should consider:

  • Launching products at a low price, along with a well-executed customer satisfaction email campaign, which encourages consumers to leave reviews.
  • Readjusting budgets to include other types of “Off Amazon” marketing efforts.
  • Adding an unexpected packaging surprise. Why? Because people are more likely to leave a review if they’re delighted by an unanticipated treat. This tactic also has the added advantage of acting as a counterfeit deterrent.

Need Advice From An Amazon E-Commerce Attorney?

Our firm helps business owners overcome online review challenges, in addition to other Internet business issues, like account suspensions, counterfeiting, and intellectual property troubles.

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Price Anchoring: What Is It and Why Sellers Shouldn’t Do It

price anchoring

Online clothing store Zulily caught a class action, courtesy of New York Attorney General Eric Schneiderman. The alleged offense? Price anchoring.

What Is Price Anchoring?

What’s a sly way to make consumers think they’ve stumbled upon a once-in-a-lifetime, can’t-pass-up, incredible steal of a deal? Easy: advertise an inflated original price and promote the MSRP (manufacturer’s suggested retail price) as a *sale* price.

The practice is called price anchoring, but it’s against regulations.

Online Retailer Hit With Price Anchoring Charge

Excerpt from class action filing against Zulily:

“In some instances, they represented that the listed or original price was two or more times the manufacturer’s suggested retail price (‘MSRP’), and then offered the item at a purported 50 percent or more discount price, which was in fact the original MSRP.”

Sound byte from New York Attorney General about case:

“This case sends a clear message that our office will hold businesses accountable when they use false or misleading advertising practices to deceive consumers.”

Price Anchoring Has Been Around Forever

Price anchoring is as old as marketing itself. Shop owners learned early that the mere illusions of massive sales were enough to entice customers. And back in the day, few laws prohibited the practice; but regulators eventually caught on and disavowed the practice.

It’s Fine To Compare Prices; It’s Not Fine To Lie About Prices

Comparing prices is fine. But lying about an MSRP amounts to false advertising (some people call it price scheming). According to the FTC, lying about costs is an unfair business practice.

Do You Know The Name Of A Private Label E-Commerce Lawyer?

Top-rated — yet affordable — Kelly / Warner works with e-commerce entrepreneurs.

Our team assists with:

  • Price anchoring legalities;
  • Business formation;
  • FTC / FCC / FDA marketing compliance;
  • Civil law counsel;
  • Asset protection;
  • International shipping;
  • Account suspensions;
  • Counterfeit and “hijacking” incidents;
  • Intellectual property issues;
  • Promotional and product governance; and
  • Problematic consumer reviews.

A Little About Our Internet Law Practice

Want to know a little more about us? We’re a lean, but successful, boutique law firm that concentrates on Internet business issues.

Aaron Kelly, Esq.: Founding partner — and self-described gearhead — with a 10-out-of-10 on AVVO.com and a preeminent AV rating, Aaron love to help entrepreneurs and startups with everything from business formation to fighting against unfair competition tactics.

Daniel Warner, Esq.: Founding partner and certified egghead (he did receive one of the highest multi-state bar exam scores), Daniel Warner is the guy businesses want on their side. Exceptionally disciplined with a photographic memory, Dan is an incredible litigator who’s won his share of David v. Goliath cases.

Raees Mohammad, Esq.: Partner and academically recognized scholar, Raees is the firm’s online privacy aficionado. He’s also a corporate governance maestro and deft at crafting emerging business strategies. (Oh, and, we’re pretty sure he’s a graduate of James Bond’s little-known — but highly elite — School of Smooth.)

To learn more about the rest of the team, head here. If you’re ready to talk, let’s talk. The sooner we get started, the sooner you’ll have a solution.

Article Sources

“Zulily Not the First Retailer Sued for Alleged Price Anchoring.” Legal Newsline. 25 Mar. 2016. Web. 25 Apr. 2016. <http://legalnewsline.com/stories/510701888-zulily-not-the-first-retailer-sued-for-alleged-price-anchoring>.

Giving Yourself A Great Online Review: Yelp v. Law Firm

picture of man's hand pressing top rating to accompany blog post about giving yourself a great online review
Is giving yourself a great online review allowed? Not really. In fact, Yelp sued a law firm for allegedly posting fake – yet glowing – reviews under its own entry.

The timing of this case is almost prescient, as New York State recently passed a ground-breaking law which categorizes faux-laudatory reviews – especially ones you and your employees write yourselves – as false advertising.

Yelp Sued Legal Practice Over High Praise

This Yelp v. Vendor defamation fracas began when someone left a poor review on a law firm’s — which we’ll call *McDuck* — Yelp page. After the lone, less-than-flattering comment appeared, Yelp staffers noticed a flood of A+ praise on McDuck’s profile. Suspicion led to an internal Yelp investigation, which led to the company suing the legal practice for breach of contract, intentional interference with contractual relations, and false advertising.

Word on the street is that Yelp believes McDuck is part of a “testimonial mafia ring” of sorts, wherein participating parties agree to give each other positive reviews despite having never actually used a given service or product. An “I’ll scratch your back if you scratch mine” understanding – which, till now, has been a standard online marketing practice.

Why is Yelp Taking The Time To Sue A Law Firm For Defamation?

You may be wondering, “why is Yelp even bothering with this lawsuit!? Shouldn’t they worry about providing a better online experience instead of suing users?” In response to that question, the company’s line seems to be, “Bad reviews are bad for both Yelp and consumers.”

But what isn’t being widely highlighted is that this is not McDuck’s and Yelp’s first legal run-in. Several years ago, McDuck won $2,700 from Yelp. The law firm had initiated a legal action against the online review corporation over language in Yelp’s vendor contract; McDuck  felt Yelp was extorting businesses for good reviews. Though the firm ultimately won money from the consumer-venting pioneers, much to the chagrin of McDuck, the matter was forced into arbitration because of a clause in Yelp’s vendor agreement. (Click here to read more about the difficulty of getting an arbitration clause ignored when a legal matter arises.)

Bottom Line: If Giving Yourself A Great Online Review False Advertising?

This lawsuit comes at a time when lawmakers are cracking down on paid-for, fake, and defamatory reviews. As stated above, New York State recently passed a law stipulating that self-reviews of a business or product are akin to false advertising and therefore illegal.

Clean Up Your Testimonial/Review Act

If, in the past five years or so, you have bought, bartered, or self-produced bogus testimonials for your business, service or product, it’s time to start cleaning up the now-offending material. Because remember: Giving yourself a great online review violates Section 5 of the FTC Act; it constitutes unfair and deceptive marketing.

S0, delete the reviews you wrote and posted yourself. If you work with a marketing firm, get in touch and calmly discuss the new crop of fake testimonial standards.

Want to consult with an online marketing attorney about giving yourself a great online review or another online review legal situation? Get in touch with Aaron Kelly.

Buying Online Reviews Is Legally Risky

people standing in front of an online review sign to accompany a blog post about buying online reviewsBuying online reviews: is it against the law? The New York Attorney General’s office says yes, the practice flies in the face of promotional regulations.

Don’t think it affects you because you’re not a New Yorker? It may.

Because if one state deems a particular online practice out of bounds, and people in that state can access your website, then that state’s laws may take precedence – no matter your location. Moreover, laws like this often succumb to a dominoes force — once one state does it, many states follow.

The Investigation

Tips about online marketing companies paying for reviews swirled, so NY attorney general Eric Schneiderman initiated an investigation. Schneiderman’s team quickly determined that fake online reviews were “even worse than old-fashioned false advertising.” The attorney general himself opined, “When you look at a billboard, you can tell it’s a paid advertisement — but on Yelp or Citysearch, you assume you’re reading authentic consumer opinions, making this practice even more deceiving.”

Nineteen companies were targeted in the investigation and are now paying a cumulative total of $350,000 in damages.

Buying Online Reviews Is Against Regulations; So Are Dummy Accounts

“OK,” you may be thinking, “I don’t pay for reviews, but my family, and friends sure as $#!* give my business A+ reviews on sites like Yelp, Google, and other online review sites. After all, if I don’t toot my own horn, who will!?”

Of course, family and friends can review your products. Technically, yes, they’re supposed to disclose their relationships, but nobody is going to waste resources on tracking down Aunt Bessie who posted a glowing review of your latest cookware product.

But businesses can land in legal hot water by using dummy accounts to post fake reviews. Depending on circumstances, it can be considered a form of unfair and deceptive marketing.

Oh Snap! I Have Tons of Paid Reviews Out There! What Should I do Now!?

First, breathe. The fake testimonial police aren’t going to beat down your door in the morning, demanding thousands of dollars and your Xbox. That said, if you have been buying online reviews, it’s time to craft a roll-back strategy. Here are some suggestions:

  1. If you, yourself, have posted any reviews on sites, like Yelp! or Amazon, remove them.
  2. If you hired an online marketing company to increase online visibility, contact them. Don’t yell and get aggressive. After all, this is a new law. It used to be perfectly acceptable to purchase or barter for positive reviews. Calmly inform them of New York’s decision and see what they say. If they insist bought reviews are fine, send them this article. If they still scoff, find a new online marketing company that stays up-to-date on ever-changing Internet laws.
  3. Re-appropriate your marketing dollars. If you’ve been buying online reviews, consider putting that money towards other marketing efforts. How about: Quality online copy writing for your website and blog, an updated design for your website, pay-per click advertisements, or even a print ad in your local paper?

If you want to speak with an attorney about an online consumer review issue, get in touch.

Spam Lawsuit: Can You Sue For Defamation If Someone Calls You A Spammer?

SPAM legal information
Would a judge and jury consider using the term”spammers” a defamatory act? A new high-profile defamation lawsuit involving Facebook could solidify case law on the issue.

Can you sue for defamation if someone calls you or your business “a spammer”? In a word: Yes. Point in case, mega-Internet-corp, Facebook, recently got slapped with a spam lawsuit — and the charge was defamation.

Profile Technology Ltd. et al. v. Facebook Inc. was filed in the California Superior Court, in San Mateo county. If Facebook loses this spam-related lawsuit, it would solidify case law with regards to the defamatory nature of being labeled a spammer.

Facebook’s Being Sued For Defamation For Allegedly Calling An App Developer “Spammy”

This time the social networking company is being sued for defamation, in a California court, by an app development firm based in New Zealand. Profile Technology Ltd. – which makes IQ tests, in addition to polling and petition apps – says Facebook “abused its power in ways that were fraudulent, oppressive and malicious” by cutting off the companies access to an automated data crawling feature and sending users to links that insinuated Profile Technology produced “spammy” and “unsafe” products.

Over the years, Profile Technology had aggregated 400 million member profiles, which translated into 15 billion connections across the digital spectrum.

Profile technology swears they were unexpectedly shut down by Facebook after the parties couldn’t agree on a contract. Now, here’s where things get a little foggy. At first, Facebook spokespeople said they never had an agreement with Profile Technology. The app company says the opposite; according to them, Facebook “flip flopped and demanded revisions in the contract terms so drastic that they would have amounted to delivery to Facebook of all rights with respect to plaintiffs’ technology and information.”

Essentially, Profile Technology’s argument is: the abrupt cut-off, coupled with the Facebook’s “dismissal” announcement methods, caused the company to lose business and industry respect.  Specifically, the plaintiffs are alleging that:

  1. Facebook published statements asserting that “links” (HTML hyperlinks) to Plaintiffs’ site at “profileengine.com” have “been blocked for being spammy or unsafe.”
  2. The “spam” accusations “imply that plaintiffs have maliciously abused the world’s shared Internet resources” and that “’Spammy’ conduct merits condemnation and shunning in the Internet community to which plaintiffs belong.”

Profile Technology is demanding a jury trial. In addition to defamation, the app development firm is also suing for breach of contract, interference with business relationships, defamation and unlawful, unfair and fraudulent business practices.

Can You Sue Someone For Saying You’re A Spammer?

Back in the day, defamation lawsuits were of the old-skool variety — politicians calling each other names in public and religious luminaries being offended by adult entertainment moguls. But the more tech-y we get, the more Internet-related defamation lawsuits we see.

And yes, these days, being labeled a spammer could do some serious damage to your business. Many judges and juries are starting to reflect their understanding of that reality by handing down verdicts in favor of the defamed party. Now, in the United States, truth is a strong defense against defamation. As such, it’s important for online marketers and businesses to review the CAN-SPAM Act to ensure they aren’t, technically, spammers.

If you’re in need of an online defamation lawyer, get in touch. Our team of attorneys has considerable experience with Internet defamation litigation. An AV-rated firm, with a 10 out of 10 rating on the respected lawyer review website, AVVO.com, Kelly / Warner has earned a reputation for being one of the top online defamation law firms in the industry. Contact us today to begin the conversation.