September 24, 2013
In a curious advertising story making the media rounds over the past few days (see: here and here), New York regulators are planning to crack down on phony online reviews (sometimes referred to as “astroturfing” using the synthetic grass term as a metaphor for fake “grass roots” testimonials/opinions).
According to reports, settlements have already been reached with 19 companies for allegedly fake online reviews that have agreed to pay a combined USD $350,000 in penalties. The companies, which include a laser-hair removal chain, adult entertainment club and charter bus operator, posted fake reviews on Google, Citysearch, Yahoo and Yelp. Also curiously, though perhaps not surprising, phony reviews were reportedly purchased from reviewers in Eastern Europe, the Philippines and Bangladesh for as little as a dollar a review.
In Canada, false testimonials can be challenged under the Competition Act where they are either literally false or misleading (under the general civil or criminal misleading advertising provisions of the Act).
This may include a variety of avenues of challenge, including most clearly where the person providing the testimonial literally didn’t use the product or service, where claims appear to be testimonials when there is in fact no user/customer, where unsupported performance claims are made in conjunction with a testimonial, or where testimonials or performance claims are distorted or don’t correspond to the product being advertised. In this regard, the Competition Act also includes specific provisions that require that performance claims be substantiated prior to being made (i.e., that they be supported by “adequate and proper testing”).
The Competition Act also includes standalone testimonials provisions that prohibit using testimonials unless the publisher can show that the testimonial was previously made or published (or approved and permission to make/publish it was given in writing). Any testimonial must also generally accord with what is actually said.
Like other enforcement agencies, Canada’s Competition Bureau has also highlighted false testimonials (including fake online testimonials) as an enforcement concern, including in its most recent March 2013 Fraud Prevention Month efforts (see: Competition Bureau Announces its Top 2 on “2 Good 2 B True Day”).
In the Bureau’s False or Misleading Representations and Deceptive Marketing Practices pamphlet, the Bureau further describes how false testimonials can be challenged under Canadian competition law and offers tips for using testimonials to comply with Canadian advertising laws.
In this regard, some general tips for using testimonials in Canada include: (1) don’t use testimonials from people who haven’t used the product (that goes without saying, but I’ll say it anyway); (2) don’t make claims that look like testimonials when there is no customer/user (i.e., fictional “customers” endorsing a product); (3) don’t use the results of product performance tests and/or testimonials in advertising unless authorized to use them; (4) if authorized to use them, don’t distort user statements or test results and ensure they’re relevant to the advertised product; and (5) ensure that any performance claims made in conjunction with testimonials can be supported by relevant data before the claims are made.
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I am a Toronto competition and advertising lawyer offering business and individual clients efficient and strategic advice in relation to competition/antitrust, advertising, Internet and new media law and contest law. I also offer competition and regulatory law compliance, education and policy services to companies, trade and professional associations and government agencies.
My experience includes advising clients in Toronto, Canada and the US on the application of Canadian competition and regulatory laws and I have worked on hundreds of domestic and cross-border competition, advertising and marketing, promotional contest (sweepstakes), conspiracy (cartel), abuse of dominance, compliance, refusal to deal, pricing and distribution, Investment Canada Act and merger matters. For more information about my competition and advertising law services see: competition law services.
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