Are Discount-For-Review Programs Legal of Illegal?

discount-for-review legalities
Are “discount-for-review” programs legal? Do they violate FTC guidelines?

Do you pay for your company’s online reviews? Do you manipulate them? Barter for them? Do you offer discounts for reviews? If you do, keep reading, because the Federal Trade Commission may be on the hunt for people like you.

FTC Cracks Down on AmeriFreight For “Coerced” Online Reviews

Online reviews matter – a lot. Knowing this, the marketers at AmeriFreight allegedly implemented an “I’ll scratch your back, if you scratch mine” online review system. How’d it work? The Georgia-based auto broker offered clients a $50 discount in exchange for posting online reviews. Customers weren’t obligated to be positive, they just had to post feedback.

To ensure customers met their discount-for-review pledge, AmeriFreight reminded clients that the discount only applied if they posted the online reviews.

Bottom line: the program worked – well. And as a result, AmeriFreight was able to market itself as “top-ranked” and “highly rated”. Company promotional materials boasted of being “more highly ranked…than any other company in the automobile transportation business.”

The Federal Trade Commission Uncovered AmeriFreight’s “Discount-for-Review” Scheme and Unleashed the Marketing Kraken

How Can The FTC Punish “Unfair and Deceptive” Marketers?

The Federal Trade Commission is the nation’s “consumer watchdog”. It’s responsible for shielding you and me from “unfair and deceptive” marketing practices. The agency can censure and fine companies that shirk advertising and promotional guidelines and laws, like the 2012 online advertising guidelines, the FTC’s Dot Com Disclosures and Section 5 of the FTC Act.

According to current standards, pay-for-review programs don’t pass legal muster, so AmeriFreight lost the case.

Consequences of Operating A Discount-For-Review Program

Luckily for AmeriFreight, the FTC is not doling out a hefty fine. However, the auto company must stop promoting itself as “top-ranked” and “highly rated”. Moving forward, AmeriFreight must disclose any and all material connections associated with testimonials and reviews. And lastly, if the company is caught ignoring the sanctions, the commission will most likely wield its pecuniary punishing power.

Making an Example; Next Round: Huge Fines for Pay-For-Review Schemes

If you’ve made it this far, you may be thinking, “Pfft! AmeriFreight wasn’t fined into oblivion for violating discount-for-review restrictions, so, what is preventing me from running a similar program!?”

Word to the wise: don’t do it.

When new – legally ambiguous – marketing techniques hit the scene, first the FTC investigates the situation. If commissioners agree that a given practice is dastardly, they sound the “unfair and deceptive” marketing alarm and publicly scold violators.

But being in the first batch of baddies has its benefits; instead of being freighted with a huge fine, round-one violators sometimes avoid financial sanctions. Instead, they’re used as the anti-poster children for illegal online marketing techniques. In this case, AmeriFreight dodged a financial hammer by being one of the first “discount review violators” investigated by the FTC. But now that the auto-broker has fulfilled its role as a cautionary case, down the line, businesses engaging in discount-for-review schemes may be fined.

Discount-For-Review Officially “Unfair and Deceptive” Marketing Practice

Now that the FTC – via its public censure of AmeriFreight – has publicly decried client review manipulation, in the future, commissioners may fine businesses that ignore guidelines regarding discount-for-review schemes.

Online Marketing Lawyers That Know The System And How To Work It

Kelly / Warner Law is a pioneer in the fields of Internet law and online marketing law. We’ve helped over 500 companies:

  • Evade FTC censure;
  • Craft effective — but legal –promotional campaigns;
  • Comply with international Internet marketing guidelines; and
  • Navigate national and local unfair and deceptive marketing regulations.

We work with weight-loss marketers, professional design firms, affiliates, Amazon sellers, game developers, SEO firms, tech firms, startups and Fortune 500 companies. To read an overview of our online marketing legal practice, head here. If you’re ready to chat with one of our top-rated marketing attorneys, get in touch today. Kelly / Warner attorneys resolve challenges quickly – and for the right price.

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