Well that didn’t take long. The FTC has settled with Reverb Communications, a public relations firm, for its questionable tactics in promoting a clients gaming applications in the Apple iTunes store. According to the Complaint filed by the FTC, the firm posted fake reviews on iTunes saying how wonderful its clients products were, such as “One of the best!” “Amazing New game!”. As one could guess, this violates some nifty little rules from the FTC…specifically those that require honest reviews from actual customers. It takes no stretch of the imagination to determine that if you’re hired to do marketing for a company you can’t exactly be an “honest actual customer”. Sure, they could purchase the product and use it themselves and claim how great it is, but they have to disclose the material connection between their review and the seller of the product. Whoops.
The FTC’s proposed settlement requires Reverb to remove any endorsements that misrepresent the authors of the posts as actual customers. It also prohibits the company from misrepresenting its status as an independent reviewer or it must at least disclose its material connections when making the endorsement. The order defines “material connections” as those relationships that materially affect the weight or credibility of any endorsement and would not be reasonably expected by consumers. So why is this important you may ask? Well, it’s one of the first of many instances where the FTC will flex it’s muscle to ensure compliance with the new FTC guidelines. Not only did the FTC take on the PR Firm, but it named the agency’s sole owner as well. In addition, the violations occured between 2008 and May of 2009, meaning the FTC will go after those who violate the rules well before the effective date of the guidelines.
In all, this is one of the first instances where the FTC is utilizing the rules it promulgated in late 2009. In this case, it was to ensure that reviews from customers were from actual customers….and if they were not they must disclose the material connections. One thing is for sure though, this will not be the last.