The Federal Trade Commission (FTC) has fined a company for allegedly paying for fake reviews to be posted on Amazon, in what it calls the first case of its kind.
According to the FTC’s complaint, Cure Encapsulations Inc. and its owner Naftula Jacobowitz sold “Quality Encapsulations Garcinia Cambogia Extract with HCA” capsules on Amazon.com. The company described its product as a pill that suppresses appetite and blocks fat.
The FTC charges that the defendant bought five-star Amazon reviews for its product from a now-defunct site, amazonverifiedreviews.com. The complaint alleges the defendants represented that the purchased Amazon reviews were truthful reviews written by actual customers.
The FTC’s guidelines for endorsements can be seen here.
The company could not be reached for comment.
FTC has imposed a $12.8 million judgment on the company, which includes a stipulation that it provide “competent and reliable scientific evidence” to back up any health claims.
The $12.8 million has been suspended upon payment of $50,000 to the FTC and the payment of certain unpaid income tax obligations. If the defendants are later found to have misrepresented their financial condition to the FTC, the full amount will immediately become due.
“People rely on reviews when they’re shopping online,” said Andrew Smith, director of the FTC’s Bureau of Consumer Protection, in a statement. “When a company buys fake reviews to inflate its Amazon ratings, it hurts both shoppers and companies that play by the rules.”
Amazon sent the following statement to JCK: “We welcome the FTC’s work in this area. Amazon invests significant resources to protect the integrity of reviews in our store because we know customers value the insights and experiences shared by fellow shoppers. Even one inauthentic review is one too many. We have clear participation guidelines for both reviewers and selling partners and we suspend, ban, and take legal action on those who violate our policies.”
Amazon had previously sued amazonverifiedreviews.com, and the site is now offline.
The New York State Attorney General has fined companies for soliciting fake Yelp reviews.