Page 5 - Fashion Law

NYLJ.COM | Fashion Law | MONDAY, AUGUST 28, 2017 | S5
Everyone’s a Critic: Fake E-Commerce Reviews Undercut the Marketplace
IBY ANDREW B. LUSTIGMAN
n the past, most product and service reviews were completed and published by “experts” in the relevant field. For
example, known and esteemed fashion crit- ics were tasked with forming opinions about the style and quality of designer clothes, and those opinions, at least on the surface, were backed by the critic’s expertise and knowledge of the fashion industry. Today, however, widespread Internet usage has led to an e-commerce market with universal abil- ity to post feedback, thereby creating and perpetuating a platform for anyone wishing to publish his or her own reviews, no mat- ter how limited the basis is for his or her opinions. These DIY consumer reviews are not composed in vain, though, because stud- ies indicate that the majority of consumers read and evaluate other consumers’ reviews prior to making online purchasing decisions. Unfortunately, this has led to the manipu- lation of the review process, with brands, advertisers, and individuals alike engaging in the increasingly prominent practice of posting disingenuous reviews, the purpose of which may be to either encourage the pur- chase of a product or service, or contrarily, to discourage such a purchase. The fashion industry has begun to realize the infiltration of such sham reviews, and the relevance of this phenomenon will likely intensify as the fashion industry continues to engage in online sales.
Fake Reviews
The posting of fake reviews has begun to generate regulatory enforcement. The New York Attorney General settled a case against 19 companies engaged in the prac- tice of submitting fake reviews to consum- er-review websites, including Yelp, Google Local, and CitySearch. Naming this practice “astroturfing,” the Attorney General opined that this practice of posting fake reviews of products and services is the 21st cen- tury’s version of false advertising, and cautioned merchants against using this practice.
More recently, the Federal Trade Com- mission (FTC) charged two brothers, Son “Sonny” Le and Bao “Bobby” Le, with creat- ing fake review websites for their trampoline products. Each of the websites used to sell their trampolines featured the “Trampoline
ANDREW B. LUSTIGMAN is a partner at Olshan Frome Wolosky.
Safety of America” logo. Additionally, the brand websites implied official approval by displaying the supposedly independent “Bureau of Trampoline Review” and “Top Trampoline Review” logos. Some of the logos also appeared with the claim “Tram- poline of the Year.” Each of these supposed review organizations claimed to provide unbiased evaluations of different trampo- lines, focusing on safety and performance. All of these “organizations” unreservedly recommended the brothers’ trampolines on their websites. Upon investigation, the FTC discovered that Son Le owned all three of these websites, and both broth- ers controlled the content disseminated on the sites. In fact, these “fake” review web- sites were allegedly implemented by the brothers to advertise and legitimize their products. The FTC filed a complaint against the brothers, alleging that the brothers had both made false claims about their prod- ucts on the “fake” websites,
The resulting consent order stipulated that Lord & Taylor must clearly and conspicu- ously disclose material connections with endorsers.
On closer analysis, the FTC’s treatment of both undisclosed paid endorsements and fabricated, illegitimate reviews on retail or review sites seems consistent. A failure to disclose material connections between the reviewer or endorser, and the advertiser or product, may be considered evidence of intent to deceive the public and affect purchasing decisions. Although the Lord & Taylor case does not specifically address fake reviews in the fashion industry, it does reflect the FTC’s desire to maintain clear and con- spicuous disclosure of material connections between products and those commenting on the products, whether they be endorsers or reviewers. The FTC appears to require candor in both cases to avoid deception of consumers.
As manipulation of the consumer review process continues to be a concern for the e-commerce market, various stakeholders have pursued other avenues to combat the publication and effect of fake or astroturfed reviews. Amazon, one of the world’s largest online retailers, has taken several different approaches to limit unsubstantiated and falsified reviews. First, it adopted a policy that prohibits use of the consumer review function in a manner that delegitimizes the process. Amazon has enforced this policy by pursuing claims against merchants on its site for posting fake reviews of products with which the merchant is directly associated. Amazon has gone so far as to file arbitration claims against individual sellers, asserting that the sellers used “sock puppet” accounts to post fake reviews about their products. In these arbitration actions, Amazon sought to ban merchants who had manipulated Ama- zon’s market place and the review system to their own advantage. Through these actions, Amazon evidences a persistence to main- tain the integrity of its consumer review process.
Manipulation of the review process has also been discussed in response to stories that some retailers are requiring consumers to remove negative reviews prior to process- ing a consumer requested refund. It has been alleged that certain low cost fashion com- panies, advertised largely on social media sites such as Facebook and Instagram, fulfil consumer orders with deficient products,
and that they had violated
§5(a) of the Federal Trade
Commission Act by failing
to disclose the material
connection they had with
the Infinity and Olympus Pro
trampolines. Ultimately, the
FTC and the Les settled on
an order that prohibits them
from presenting misleading
reviews of their products.
Additionally, the settlement
requires the Le brothers to
clearly and conspicuously
disclose any material con-
nections between their companies and a consumer, reviewer, or endorser, or another entity connected to the product.
The FTC has also pursued fashion retail- ers for failing to disclose material connec- tions between themselves as the advertiser, and endorsers of their products. In March 2016, the FTC filed an administrative com- plaint against Lord & Taylor, alleging that the department store had deceived custom- ers by failing to disclose a material connec- tion between the retailer and fashion mer- chandise. Lord & Taylor commissioned 50 social media influencers to post Instagram pictures of themselves wearing the same paisley dress. In order to accomplish this, Lord & Taylor provided the dress at no cost and paid monetary compensation to the influencers. Per the contracts, Lord & Taylor approved all potential posts, each of which failed to disclose the financial connection between the advertiser and the influencer. The FTC alleged that by failing to disclose that the posts were paid promotions, Lord & Taylor breached fed- eral advertising regulations. Ultimately, the FTC and Lord & Taylor settled the matter.
This will remain a constant hurdle
for third-party retailers, review sites, regulatory agencies, and other stakeholders that aim to preserve legitimacy, as fake reviewers discover new and inventive ways to publish reviews that are not based on actual use of a given product.
and when the consumer posts a
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