• 536 days Will The ECB Continue To Hike Rates?
  • 537 days Forbes: Aramco Remains Largest Company In The Middle East
  • 539 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 938 days Could Crypto Overtake Traditional Investment?
  • 943 days Americans Still Quitting Jobs At Record Pace
  • 945 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 948 days Is The Dollar Too Strong?
  • 948 days Big Tech Disappoints Investors on Earnings Calls
  • 949 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 951 days China Is Quietly Trying To Distance Itself From Russia
  • 951 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 955 days Crypto Investors Won Big In 2021
  • 955 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 956 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 958 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 959 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 962 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 963 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 963 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 965 days Are NFTs About To Take Over Gaming?
  1. Home
  2. News
  3. Breaking News

Regulators Charge First Company Ever For Fake Amazon Reviews

Fake Reviews

In the beginning, we had fake news. Now we have fake reviews.

No one can deny that reviews can be critical for e-commerce companies and businesses that operate in online marketplaces such as Amazon--not only because a higher rating can mean better conversion rates but also because more reviews frequently mean a higher ranking in Google search results.

Given what’s at stake, the temptation to game the system by writing, buying or soliciting fake reviews can be high.

But businesses that rely on such underhand tactics now better be careful.

The Federal Trade Commission (FTC) has just filed and won a case against fraudulent Amazon reviews, the first time ever that the consumer protection watchdog has successfully indicted a business for the practice.  

On February 19, the FTC filed a complaint against Cure Encapsulations, Inc. for paying a third-party website to write misleading 5-star Amazon reviews for its weight-loss supplement, Garcinia cambogia. Less than a week later, the courts ruled in favor of the FTC and imposed a $12.8-million fine on the defendant.

Heavy penalties

Cure Encapsulations was found guilty of having paid amazonverifiedreviews.com an unspecified amount of money to keep the product’s rating above 4.3 out of 5 stars by stating that the supplement was a powerful appetite suppressant and blocked fat from forming. The FTC found these claims to be false and unsubstantiated—and for good reason. Garcinia cambogia, a tropical fruit also known as the Malabar tamarind, is in fact suspected to cause acute liver failure as per the National Center for Biotechnology Information (NCBI).

Related: Billion Dollar Bust Proves The World Still Has A Drug Problem

As part of the settlement, Cure Encapsulation has agreed to desist from ever making claims such as “fat blocking, appetite suppressing,  weight loss or disease-treatment” for any of its dietary supplements, drugs or food before reliable scientific evidence based on human clinical testing is available to support the claims. Cure Encapsulation is now required to inform Amazon that it paid for reviews, which in itself is a violation of the online retailer’s rules around promotional content. Further, the company must notify all customers who have purchased the product.

To keep the company in line, the FTC imposed a fine of $12.8 million though only $50,000 was due immediately with the rest used to enforce the judgment.

Clamping down on fake reviews

Fake Amazon reviews have been a big problem on the giant e-commerce site for many years though regulators like the FTC have shown little interest in cracking down on the practice.

In the past, Amazon has claimed that less than 1 percent of reviews on the platform are fake. But with more than half a billion reviews on the site, a lowball estimate of fake reviews exceeds 5 million, by no means a trivial number. Amazon has been going hard at review sellers themselves including suing sellers on freelance job sites such as Fiverr. The company has vowed zero tolerance on the practice conceding that one fake review is one too many.

With the  FTC now beginning to stamp its authority on the online space, it’s setting a firm precedent that companies that abuse online platforms have got nowhere to hide. As the FTC director of consumer protection, Andrew Smith, has duly noted, companies that buy fake reviews to inflate their online ratings hurt both shoppers as well as companies that play by the rules. One of the agency’s key mandates is the prevention of anti-competitive business practices. In recent months, the organization has demonstrated a growing willingness to rein in on abusive practices in the tech industry that go far beyond the low-level scams such as fake reviews.

Still, it’s going to be interesting to see whether the agency has the will or resources to go after the biggest bad actors that lurk on the giant online platform.

By Alex Kimani for Safehaven.com

More Top Reads From Safehaven.com:

Back to homepage

Leave a comment

Leave a comment