The Federal Trade Commission was founded in 1914 to help prevent unfair methods of competition in commerce, with the organization growing in power and authority over the past 100 years. Interestingly, the organization is headed by five Commissioners who have to split in politics by a 3-2 margin between the two major parties. This provides some consistency despite a lot of turnover in the five leadership roles over time.
This week, let's introduce you to the FTC by looking at one of their recent interesting enforcement actions taken against a company called Mikey and Momo, who sold an Aromaflage spray product and candles that allegedly were insect and mosquito repellant. Aromaflage used a marketing campaign centered on the phrase "fragrance with function," again referring to the claims that the products were effective repellants for mosquitos carrying Zika and other viruses. However, there was no scientific evidence to back up these claims, making them false and misleading to consumers.
That's precisely the type of activity that the FTC was created to stop, and hence, they brought a case against Mikey and Momo to stop this deceptive marketing. There was another angle to the case that caught my attention though, as it implies bigger impact for many more small companies and individuals doing business online.
The Aromaflage products had several 5-star reviews posted very quickly after the product release on Amazon. The FTC discovered that all of these 5-star reviews were written by one of the owners of the business or her relatives. The FTC in the final consent order against the company required this company to clearly and conspicuously disclose any material connections with reviewers and endorsers on Amazon and other online platforms in the future. In other words, getting your mom and aunt to post glowing product reviews to boost your initial Amazon ratings was deemed a deceptive business practice the FTC wants to curtail.
Obviously this type of administrative ruling could have far reach if it begins to be enforced against small sellers who often engage in such boosted reviews to have a chance on the open marketplace. The risk is that if the product becomes successful, these reviews could lead to FTC fines and orders against the company later. In the short term, if you do business on these online platforms or anywhere reviews are posted, you should make sure any connections you have to reviewers is properly disclosed, whether that be you giving free product to a reviewer or a familial relation.
This week, let's introduce you to the FTC by looking at one of their recent interesting enforcement actions taken against a company called Mikey and Momo, who sold an Aromaflage spray product and candles that allegedly were insect and mosquito repellant. Aromaflage used a marketing campaign centered on the phrase "fragrance with function," again referring to the claims that the products were effective repellants for mosquitos carrying Zika and other viruses. However, there was no scientific evidence to back up these claims, making them false and misleading to consumers.
That's precisely the type of activity that the FTC was created to stop, and hence, they brought a case against Mikey and Momo to stop this deceptive marketing. There was another angle to the case that caught my attention though, as it implies bigger impact for many more small companies and individuals doing business online.
The Aromaflage products had several 5-star reviews posted very quickly after the product release on Amazon. The FTC discovered that all of these 5-star reviews were written by one of the owners of the business or her relatives. The FTC in the final consent order against the company required this company to clearly and conspicuously disclose any material connections with reviewers and endorsers on Amazon and other online platforms in the future. In other words, getting your mom and aunt to post glowing product reviews to boost your initial Amazon ratings was deemed a deceptive business practice the FTC wants to curtail.
Obviously this type of administrative ruling could have far reach if it begins to be enforced against small sellers who often engage in such boosted reviews to have a chance on the open marketplace. The risk is that if the product becomes successful, these reviews could lead to FTC fines and orders against the company later. In the short term, if you do business on these online platforms or anywhere reviews are posted, you should make sure any connections you have to reviewers is properly disclosed, whether that be you giving free product to a reviewer or a familial relation.
The Bottom Line is, the FTC often defines the course for what is appropriate under marketing and consumer protection rules, and this month's ruling against Aromaflage is one of the first notable decisions looking to change biased online commenting on commerce sites. We will keep our eyes on how the FTC affects our tech world and online consumer world as we move forward, as the government organization often provides much to discuss.
----------------------------------
Do you have a question? Send it in!
Thanks for reading. Please provide feedback and legal-themed questions as segment suggestions to me on Twitter @BuckeyeFitzy
No comments:
Post a Comment