5-Year Jail Sentence For Fake Review Scammer

ecommerce jailHere’s some e-commerce marketing advice: Don’t buy fake reviews! We get it; it’s tempting — but also against regulations! And in China, it can land you a five-year stint in the pokey.

(A quick a note: Although this cautionary tale unfolds in China, U.S. online sellers should pay attention because similar schemes have found their way stateside. Remember: Businesses are responsible for third-party promotions carried out on their behalves. U.S. e-commerce entrepreneurs probably won’t land in jail for using fake review services; but they could end up in a world of financial hurt, courtesy of crushing FTC fines.)

The Brushing Ballad of Mr. Li

Li was his last name and “brushing” — (e.g., faking e-commerce transactions and falsifying reviews) — was his game. He opened shop in 2013 and mainly worked with sellers on Taobao (think: Amazon.com of China). At the request of brands, Li enlisted people to purchase empty packages and post fake — but glowing — reviews. The process helped sellers climb Alibaba’s “credibility” ladder, giving them prime search real estate. By 2014, Li had pocketed nearly one million yuan.

Eventually, however, authorities caught up with the brusher. During his trial, Li said he knew he was breaking Taobao’s rules but didn’t think he was breaching the law. Ultimately, authorities sentenced Li to five years. He’s also on the hook for 920,000 yuan (US $135,000) for “breaking national regulations, knowingly spreading fake information online through publishing services for profit, and disrupting the market order with serious consequences.”

Brushing Is Big, Risky Business

Fake purchase and review operations — a.k.a., “brushing” services — are big, underground business in China, and increasingly in the United States. In 2014, experts estimate that nearly 700 companies, along with 500 chat groups, facilitated brushing scams on over 600 billion yuan worth of sales. Just recently, over 50 people “were arrested in Heilongjiang on suspicion of cheating Taobao stores out of 2.47 million yuan.”

Alibaba, China’s top e-commerce platform, also expanded its fraud-busting efforts. Over the past year, the online retailer has punished over 20,000 sellers for using false transaction services. During the same period, Alibaba banned an additional 6,000 accounts for egregious acts of consumer deception.

Fake Review Enforcement Actions: Genuine or Fake?

Are fake review companies the only phonies?

Many businesses argue that online retail platforms are also knee-deep in deception. But instead of trading in phony reviews, they exaggerate efforts to combat fraud.

Despite detractors, though, Zheng Junfang, Alibaba Group’s chief platform governance officer, recently explained to a media outlet: “Taobao has always dealt strongly with credibility-distorting behavior. We currently have a number of measures in place to counter this, including a verification system, manual audits, and a reporting system for users.”

Are fake reviews issues affecting your business? We Can Help.

As consultants who regularly work with e-commerce professionals, we’ve seen the damaging effects of phony reviews. More importantly, we’ve developed solutions that help companies bounce back.

If an online review matter is causing you problems, let’s talk. Our team has worked with hundreds of businesses — large and small. To read more about online trade libel, head to the consumer review section of our blog.

If you’re ready to discuss your situation with an experienced attorney who can explain your options, please get in touch.

Article Sources

Tone, S. (2017, June 22). In Judicial First, Man Imprisoned for Fake Taobao Reviews. Retrieved September 18, 2017, from http://www.sixthtone.com/news/1000374/in-judicial-first%2C-man-imprisoned-for-fake-taobao-reviews

Amazon Review Loophole & Feedback Blackmail: E-commerce

Amazon review loophole

Is There A Marketing Loophole When It Comes To Up-Voting Amazon Reviews?

The ever-evolving nature of online business is a source of both excitement and exasperation for entrepreneurs.  Boundaries are repeatedly being pushed — sometimes pitting pioneers against the proverbial “powers that be.”

Take, for example, the semi-recent Amazon review changes. A few months back, a tornado barreled through the e-commerce industry: Amazon had banned incentivized reviews. No longer could sellers offer free products in exchange for honest feedback. Ostensibly, the move hurt companies relying on the technique for product launches.

But instead of throwing in the towel, marketers did what they do best…adjusted. Many started offering “list optimization” and “list maintenance” services.

How did the new system work? Promotions experts enlisted users to up-vote helpful reviews; instead of writing posts, operatives boosted positive reviews.

It was a genius approach; because if you look closely at Amazon’s interface, a question sits at the bottom of each review: “Was this review helpful to you?” Nowhere does it indicate that review-rating is dependent on product purchase. After all, (and theoretically), reviews are tools for potential buyers — and potential buyers find some reviews more helpful than others during the decision making process.

Regardless, Amazon insists its algorithms unearths these types of up-vote networks. “We have machine-learned processes to detect inauthentic customer insights including the manipulation of helpful votes and will ban vendors, sellers, and reviewers who are found to be out of compliance with our policies,” explained a company spokesperson.

Marketing Blackmail: Sabotaging A Listing To Drum Up Business?

A recent New York Post article touched on an Internet law issue, about which we’re also hearing rumblings.

Here’s an excerpt.

The scenarios can get nastier still, according to one merchant who markets skin-care products on Amazon. Asking not be identified for fear of retribution from these vendors, the merchant said his product was a best-seller on Amazon in mid-April, when shoppers were scooping up 450 units a day.

Earlier this month, however, he noticed that all of the negative reviews — about eight of them — were on the top of his page, though the vast majority of his reviews were positive.

The merchant reached out to a “list optimization” vendor who’d previously sent him an e-mail advertising its services. The vendor, whose company the merchant declined to identify, offered to “clean up” his problem for $350 or to provide “listing maintenance” for $1,000 a month.

The skin-care merchant declined the services. The next morning the number of negative votes climbed to 160. On the following day it was 260.

The vendor called him back and suggested that one of the merchant’s competitors — whose positive review votes had, maybe not coincidentally, risen by a lot — was responsible for the negative votes.

The vendor reiterated his offer, upping the cost to $2,000 because the problem had grown exponentially. The vendor also offered to “screw the competitor’s site” according to the merchant.

Blackmailing businesses, via fake review manipulation, undermines “truth-in-advertising” standards and various Federal Trade Commission “unfair and deceptive” marketing rules. If someone is unfairly attacking your website or product listing, in this manner, we may be able to help. Our team has assisted countless businesses with online review issues of this nature.

Want to read more about online feedback legalities? Head over to the consumer review law section.

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.

Source

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 An Online Review: Yelp v. Law Firm

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

The timing of this case is almost prescient, as New York State recently passed a law that categorizes fake laudatory reviews as false advertising.

Yelp Sued Firm Over High Praise

This Yelp v. Business defamation fracas began when someone left a poor review on a law firm’s (that we’ll call *McDuck* — but not real name) Yelp page.

After the lone, less-than-flattering comment had appeared, Yelp staffers noticed a flood of A+ praise on McDuck’s profile. Suspicion led to an internal Yelp investigation, which resulted in a lawsuit. The charges? Yelp sued the firm 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 ring”, wherein participants agree to give each other positive reviews despite never using 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.”

What isn’t being highlighted, though, is that McDuck’s and Yelp have tangled before. Several years ago, McDuck won $2,700 from Yelp. The firm had initiated a legal action against the online review platform because language in Yelp’s vendor contract; McDuck  felt Yelp extorted businesses for good reviews.

In the end, and 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 overriding an arbitration clause.)

Bottom Line: Is Giving Yourself An Online Review False Advertising?

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

Clean Up Your Testimonial/Review Act

If you’ve bought, bartered, or self-produced bogus testimonials for your business, service or product, it’s time to start cleaning up the mess. Because remember: Giving yourself an 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 an online review or another online review legal situation? Get in touch with Aaron Kelly.

Buying Online Reviews Is Risky: A Case Study

people standing in front of an online review sign to accompany a blog post about buying online reviewsIs buying online reviews against the law? New York’s Attorney General says, yes, purchasing reviews flies in the face of promotional regulations.

Don’t think it affects you because you’re not a New Yorker? Think again.

Because if a state deems a practice out-of-bounds, and people in that state can access your website, then said state’s laws may take precedence – no matter your location.

The Investigation

NY attorney general Eric Schneiderman initiated an investigation into paid reviews. Schneiderman’s team quickly determined that fake online reviews were “even worse than old-fashioned false advertising.” The attorney general 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.”

The AG targeted Nineteen companies in the investigation, and they paid 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 give my business A+ reviews on sites like Yelp, Google, and other 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 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 a marketing company to increase online visibility, contact them. Don’t 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, like quality content 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 someone for defamation over SPAM accusations?

Can you sue someone for defamation over SPAM accusations
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 someone for defamation over SPAM accusations? In a word: Yes. Point in case, a development business recently slapped Internet mega-corp Facebook with such a claim.

The case is Profile Technology Ltd. et al. v. Facebook Inc. And the ruling will definitively answer: Can you sue someone for defamation over SPAM accusations?

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

A highly-connected New Zealand app development firm sued Facebook for defamation over accusations of SPAM activity. Profile Technology Ltd. – which makes IQ tests, plus polling and petition apps – says Facebook “abused its power in ways that were fraudulent, oppressive and malicious.” According to the app company, the social media hub cut Profile’s access to data crawling features and insinuated that Profile Technology produced “spammy” and “unsafe” products.

Profile technology swears Facebook unexpectedly pulled its plug after a fruitless contract negotiation.

And here’s where things get a little foggy.

At first, Facebook said it never had an agreement with Profile Technology. For its part, the app company says 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, cost the company money and respect.  Specifically, the plaintiffs alleged 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 demanded a jury trial. In addition to defamation, the firm also sued for breach of contract, interference with business relationships, defamation and unlawful, unfair and fraudulent business practices.

Can You sue someone for defamation over SPAM accusations?

Back in the day, defamation lawsuits involved political name calling and satire spars between preachers and pornographers. But the more tech we get, the more Internet defamation lawsuits arise.

And yes, these days, being labeled a spammer could do serious damage to your business, and thankfully, rulings reflect that fact. But before you threaten to sue someone for defamation over SPAM accusations, review the CAN-SPAM Act to ensure you aren’t, technically, a spammer.

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 the legal know-how you need. Contact us today to begin the conversation.