WASHINGTON – Federal regulators say they are cracking down on an “explosion” in companies’ use of bogus reviews and other misleading messages to promote their products and services on social media.
The Federal Trade Commission said it has warned hundreds of large businesses and small businesses that they could face fines if they use false claims to mislead consumers.
“The rise of social media has blurred the line between authentic content and advertising, leading to an explosion of misleading mentions in the marketplace,” the FTC said in a press release Wednesday.
The FTC’s action signals a commitment to relax its power to use sanctions to enforce consumer protection laws. The agency said it has sent formal notifications of penalty violations to about 700 companies, warning them that they could face penalties of up to $ 43,792 for each violation.
“Fake reviews and other forms of deceptive endorsements deceive consumers and undermine honest businesses,” said Samuel Levine, who heads the agency’s consumer protection office. “Advertisers will pay a price if they engage in these deceptive practices.”
The companies that receive the reviews are part of the who’s who of Corporate America – including large corporations, large retailers and consumer product companies, as well as major advertisers and advertising agencies.
They include tech giants Amazon, Apple, Facebook, and Google and its YouTube video service, as well as Internet service providers like AT&T and Comcast. Others range from retailer Abercrombie & Fitch and brewer Anheuser-Busch to manufacturers General Electric, General Motors and Honda. Popular shopping and review sites like eBay and Yelp are also included.
The FTC noted, however, that a company that received a notice does not suggest it engaged in deceptive or unfair behavior.
The opinion cites practices that the agency has previously found to be unfair or misleading. These include falsely claiming a third party approval, misrepresenting whether an endorser is an actual user, or using an approval to make misleading performance claims. He also listed the failure to disclose a material connection to an endorser and claiming that the endorser experience represents that of a typical consumer.
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