Online Reviews Can Get Your Dealership in Trouble with the FTC
Online reviews are everywhere and can help send traffic, online and in person, to your dealership. People now comment on a variety of websites- Yelp, Facebook, Twitter, TripAdvisor, the list goes on- about a variety of issues. As is the case with word-of-mouth references, bad experiences are shared far more frequently than positive ones. Business owners need to be very careful when trying to “combat” a bad online review. It is important to be transparent in your reviews. The Federal Trade Commission recently took action against two businesses for creating their own good reviews and also posting bad reviews with competitors. Don't do it! (see below).
In 2018, TIADA advised members of legislation related to consumer reviews, “the Consumer Review Fairness Act of 2016 spells out what a company can do to protect itself from inappropriate comments online. It's okay to remove a review that contains confidential or private information, like a personnel file or a company's trade secrets. It is also okay to remove a comment that is libelous, harassing, abusive, obscene, vulgar, sexually explicit or is inappropriate with respect to race, gender, etc. Finally, a company can prohibit or remove a review that is unrelated to the company's products or services.”
FTC is stepping up enforcement action. Fake online reviews are deceptive practices!
The Federal Trade Commission's Bureau of Consumer Protection Bureau has recently taken two businesses to task for modifying, deleting, or making up online reviews. According to the FTC, Section 5(a) of the Act provides that “unfair or deceptive acts or practices in or affecting commerce….are …declared unlawful.”
How can my fake reviews “affect commerce?”
On October 21st of this year, the FTC announced settlements with two companies for engaging in deceptive online marketing tactics. One Texas based company was alleged to have misled consumers by using fake online reviews posted by its employees on a third-party site. The owner instructed employees (via company email) to create fake accounts, post positive reviews on their platforms, and post negative reviews of competitors. According to the FTC
“posting deceptive or inaccurate information online pollutes the e-commerce marketplace and prevents consumers from making informed purchasing decisions. With these two actions the FTC makes it clear that it will take enforcement action against this type of illegal behavior.”
In addition and according to the Consumer Review Fairness Act, “A business cannot include a contract provision that prevents customers from writing a negative review. The Act makes it illegal for a company to use a contract provision that:
- Bars or restricts the ability of a person who is a party to that contract to review a company's products, services, or conduct;
- Imposes a penalty or fee against someone who gives a review; or
- Requires people to give up their intellectual property rights in the content of their reviews.
The Act is enforced by the Federal Trade Commission and the Texas Office of the Attorney General. A violation of the CRFA will be treated the same as a violation of the Uniform Unfair or Deceptive Act or Practices Act. A company could face financial penalties.
The FTC advises companies to review their contracts, including online terms and conditions. Also, remove any provision that restricts people from sharing their honest reviews, penalizes those who do, or claims copyright over peoples' reviews. The suggestion holds even if you've never tried to enforce it or have no intention of enforcing it.
Online reviews are here to stay. The answer to the question “what can a business owner do” is pretty clear: Closely monitor your online presence, both on review sites and social media. When the inevitable “bad” review is posted, do not delete it unless you are certain that removing the review is lawful. When in doubt, consult an attorney.