What just happened? The Federal Trade Commission has announced the settlement of its first-ever case involving the use of fake, paid-for Amazon reviews. A supplement company gave money to a third-party website to write and post the five-star ratings for a weight-loss supplement called garcinia cambogia.
Amazon has spent years battling against the scourge of fake reviews. Back in 2015, the company launched legal action against 1114 people for allegedly engaging in the practice, but this is the first time the FTC has stepped in.
The agency writes that Cure Encapsulations paid a firm called AmazonVerifiedReviews.com to create and post the fake reviews, helping maintain a 4.3 out of 5 average for the garcinia cambogia weight-loss supplement, which can cause acute liver failure. The FTC also alleges that the defendant made false and unsubstantiated claims, including reviews that stated the product was a “powerful appetite suppressant” and “literally blocks fat from forming.”
“People rely on reviews when they’re shopping online,” said the FTC’s director of consumer protection, Andrew Smith. “When a company buys fake reviews to inflate its Amazon ratings, it hurts both shoppers and companies that play by the rules.”
As part of the settlement, Cure Encapsulations is no longer allowed to make weight-loss, appetite-suppression, fat-blocking, or disease-treatment claims for any of its products without “competent and reliable scientific evidence,” which includes human clinical testing. Additionally, it is prohibited from “making misrepresentations regarding endorsements.”
The company has also been hit with a $12.8 million fine, but that will be suspended once it pays $50,000 and completes its tax obligations. The remainder will be payable if the FTC finds Cure Encapsulations misrepresented its financial situation.
Amazon has welcomed the FTC’s decision. “Amazon invests significant resources to protect the integrity of reviews in our store because we know customers value the insights and experiences shared by fellow shoppers," a spokesperson said, in a statement. "Even one inauthentic review is one too many. We have clear participation guidelines for both reviewers and selling partners and we suspend, ban, and take legal action on those who violate our policies."
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