In this era of social media and crowdsourced reviews, businesses with happy customers do what they can to publicize positive feedback. But if a company compensates customers for reviews and fails to disclose that tit-for-tat relationship, it’s illegal and deceptive marketing.

Just ask the Georgia-based auto-shipping company targeted in the Federal Trade Commission’s first case involving misrepresented online reviews.

The FTC announced today that AmeriFreight, an automobile shipment broker, agreed to settle charges that it violated the FTC Act when it deceptively represented that its favorable online reviews were based on unbiased reviews from customers.

According to the complaint [PDF], AmeriFreight – which arranges the shipment of consumers’ cars through third-party freight carriers – provided consumers with a discount of $50 off the cost of services if they agreed to review the company’s services online.

If customers refused to make an online review, the company would allegedly raise the cost of services $50.

The company also supplied customers with “conditions for receiving a discount on reviews,” which stated that if people left an online review, they would automatically be considered for a $100 “Best Monthly Review Award” given to the most creative write-ups.

After a vehicle was shipped, the company would contact consumers to remind them of their obligation to complete the online review.

In an attempt to drum up business, AmeriFreight would then encourage new customers to Google top-rated car shippers with the Better Business Bureau. “You don’t have to believe us, our consumers say it all,” the company boasted.

However, the company never disclosed the material connection between customers’ positive reviews and compensation made for the endorsements.

Under the proposed settlement, the company is prohibited from misrepresenting that their products or services are highly rated or top-ranked based on unbiased consumer reviews, or that customer reviews are unbiased.

It is also required to clearly and prominently disclose any material connection, if one exists, between them and their endorsers.

“Companies must make it clear when they have paid their customers to write online reviews,” Jessica Rich, Director of the FTC’s Bureau of Consumer Protection, said in a statement. “If they fail to do that – as AmeriFreight did – then they’re deceiving consumers, plain and simple.”

FTC Stops Automobile Shipment Broker from Misrepresenting Online Reviews [Federal Trade Commission]

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