FTC to crack down on companies using fake reviews and misleading endorsements

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The agency has sent warning letters to over 700 companies

In a unanimous vote by commissioners, the Federal Trade Commission (FTC) has elected to warn companies that allegedly use fake reviews and misleading endorsements to deceive consumers. The agency said it will use “every tool at its disposal” to hold those companies accountable.

“The rise of social media has blurred the line between authentic content and advertising, leading to an explosion in deceptive endorsements across the marketplace. Fake online reviews and other deceptive endorsements often tout products throughout the online world,” the FTC said. 

The agency fired off notices to 700 companies to warn them that it’s ready to lay down the law if they don’t start toeing the line. To rein in offenders, the FTC says it will be using its Penalty Offense Authority to remind advertisers of the agency’s legal rights and deter them from crossing the line. 

If those companies continue to use endorsements and reviews to mislead consumers, they could face significant civil penalties -- up to $43,792 per violation.

“Fake reviews and other forms of deceptive endorsements cheat consumers and undercut honest businesses,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Advertisers will pay a price if they engage in these deceptive practices.”

Which companies received warning letters?

The FTC’s list of offenders is an array of large companies, top advertisers, leading retailers, top consumer product companies, and major advertising agencies, but the brand names alone will raise an eyebrow or two.

A quick sample of the companies the FTC warned includes:

  • 1-800-Flowers.com

  • adidas

  • Airbnb 

  • Ashley Furniture 

  • AutoZone

  • Costco

  • FedEx

  • J. Crew

  • Macy’s

  • PepsiCo

  • Starbucks

  • Subaru

  • Walgreens

  • Zales

When ConsumerAffairs went looking for the ones who escaped the FTC’s ire, the ones listed on the “50 Most Valuable Global Brands” were few and far between. Some of the companies that did get a pass included American Express, UPS (however, the UPS Store did receive a notice), and JPMorgan Chase.

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