{"id":8598,"date":"2022-02-16T00:00:00","date_gmt":"2022-02-16T00:00:00","guid":{"rendered":"https:\/\/ncjolt.org\/?p=8598"},"modified":"2022-02-25T21:48:18","modified_gmt":"2022-02-25T21:48:18","slug":"the-truth-is-in-the-stars-the-ftc-cracks-down-on-suppression-of-negative-online-reviews","status":"publish","type":"post","link":"https:\/\/journals.law.unc.edu\/ncjolt\/blogs\/the-truth-is-in-the-stars-the-ftc-cracks-down-on-suppression-of-negative-online-reviews\/","title":{"rendered":"The Truth is in the Stars: The FTC Cracks Down on Suppression of Negative Online Reviews"},"content":{"rendered":"\n

When purchasing products online, it is common for consumers to read product reviews<\/a>. These reviews often include a type of rating system designed by the company\u2019s website<\/a>. For example, Amazon<\/a> products are displayed with a rating between one and five stars\u2014five indicating positive reception by consumers. The higher the review score, the more credible<\/a> the product appears, and the more likely consumers are to purchase it. However, negative scores<\/a> can deter customers by revealing low-quality products, poor customer service, and other issues. Importantly, as Jameela Ghann points out in her blog article<\/a> on Fera AI<\/em>, product reviews work as a tool to increase consumers\u2019 \u201ctrust and loyalty\u201d to a particular brand.  However, what is a company supposed to do when it receives bad reviews for a product? Following Ghann\u2019s advice<\/a>, the company should evaluate its shortcomings and work to improve them. Unfortunately, this guidance is not always embraced.<\/p>\n\n\n\n

Recently, the Federal Trade Commission (FTC) sent a message<\/a> regarding the display of negative reviews on company websites. The FTC made it clear<\/a> that negative reviews cannot be hidden merely because of their critical nature.<\/p><\/blockquote>\n\n\n\n

Recently, the Federal Trade Commission (FTC) sent a message<\/a> regarding the display of negative reviews on company websites. The FTC made it clear<\/a> that negative reviews cannot be hidden merely because of their critical nature.<\/p>\n\n\n\n

What prompted this issue of first impression for the FTC? The FTC filed a complaint<\/a> in which it alleged that \u201cin numerous instances\u201d between 2015 and 2019 Fashion Nova\u2014a fast-fashion brand with over 20 million Instagram<\/a> followers and whose clothes is frequently worn by celebrities<\/a>\u2014\u201csuppressed product reviews with ratings lower than four stars.\u201d Based on the complaint<\/a>, \u201cnumerous instances\u201d translates to the company\u2019s failure to \u201capprove or publish hundreds of thousands lower-starred, more negative reviews.\u201d<\/p>\n\n\n\n

So, why is the FTC involved? One of the FTC\u2019s goals<\/a> is to \u201c[p]rotect consumers from unfair and deceptive practices in the marketplace.\u201d This language has been used by the agency to tackle issues like companies directing employees to post fake<\/a> product reviews, false advertising<\/a>, and identity theft<\/a>.  Likewise, when it comes to online reviews and particularly, whether consumers are getting the full picture of what other purchasers are saying, the FTC is \u201ccommitted to ensuring that consumers and honest businesses are not cheated by dishonest review practices.\u201d<\/a><\/p>\n\n\n\n

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Although Fashion Nova agreed to pay $4.2 million to settle with the FTC<\/a>, the takeaway from this situation is that this is the first time the FTC has denounced this type of \u201creview suppression\u201d<\/a> and online stores must be even more careful with their consumer review methods. While Fashion Nova may be the face of the issue, it is not alone. The FTC also stated<\/a> that ten other companies would be notified that concealing or \u201cavoiding\u201d negative reviews constitutes an unfair or deceptive practice that is a violation of the FTC Act. How will the FTC be able to monitor online review practices going forward? Interestingly, three Congressmen recently introduced a bill<\/a> that would address AI automated decision-making\u2014the Algorithmic Accountability Act of 2022. While the focus of the bill is to target \u201cracial and gender bias in AI tools and automated systems,\u201d<\/a> the e-commerce market also employs AI technology. Even here, Fashion Nova made use of a \u201cthird-party online product review management interface\u201d<\/a> which was programmed to \u201cautopublish<\/a>\u201d four and five star ratings, but to reserve lower ratings for later approval<\/a>. The company argued<\/a> that reliance on this interface was the reason for the unpublished negative reviews and that those reviews were released in 2019 when the company learned of the situation.<\/p>\n\n\n\n

Under the proposed bill, companies would be required to \u201cperform an audit of their AI systems.\u201d<\/a> The results<\/a> of the audit would go directly to the FTC who would then \u201ccreate a public database where consumers can review critical decisions that have been automated by companies.\u201d<\/a>  Based on this system, if a company\u2019s practice is to withhold negative or lower-rating reviews, the public database would allow consumers to know that such a practice is ongoing. The publicity of the algorithm could deter online companies from using practices that make consumers uneasy about the reliability of product reviews. However, this 2022 AI auditing proposal is relatively fresh<\/a> and has not been voted on. It is unclear whether e-commerce companies like Fashion Nova would be subject to the same auditing system as, for example, a financial services business because the bill appears to focus on \u201cfinance, healthcare, housing, education and more.\u201d<\/a> Nonetheless, it is clear that both lawmakers and the FTC are continuing to encourage and demand transparency for consumers when it comes to online services. For now, online companies should evaluate their customer review processes to ensure they align with the goals of the FTC and let the honest ratings speak for themselves. <\/p>\n\n\n\n

Claudia Perez<\/strong><\/p>\n\n\n\n

Claudia is currently a 2L in law school and attended the University of Miami for college where she majored in Biology. With a background in science, she gravitates toward in intellectual property issues in the law. She enjoys dancing and trying new recipes. See Claudia\u2019s previous blog post here<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

When purchasing products online, it is common for consumers to read product reviews. These reviews often include a type of rating system designed by the company\u2019s website. For example, Amazon products are displayed with a rating between one and five stars\u2014five indicating positive reception by consumers. The higher the review score, the more credible the …<\/a><\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"closed","ping_status":"","sticky":false,"template":"","format":"standard","meta":[],"categories":[51],"tags":[295,291,293,294,292],"_links":{"self":[{"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/posts\/8598"}],"collection":[{"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/comments?post=8598"}],"version-history":[{"count":2,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/posts\/8598\/revisions"}],"predecessor-version":[{"id":8630,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/posts\/8598\/revisions\/8630"}],"wp:attachment":[{"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/media?parent=8598"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/categories?post=8598"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/tags?post=8598"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}