The End of the Line for Phony Reviews
The End of the Line for Phony Reviews
Not a single retail business hasn’t stretched the truth a little bit when it comes to online reviews, sprinkling in positive reviews to offset negative customer experiences. Most proprietors justify the practice, pointing out that bad reviews outpace the positive and a little creative license is necessary to accurately reflect the customer service experience. With the August 14, 2024 Federal Trade Commission (FTC) ruling on fake reviews, the not-so-innocent faux testimonials are considered unfair or deceptive practices and, therefore, misleading to consumers. For dealerships, reviews on Google, Yahoo, Yelp, Consumer Reports, Trustpilot and other consumer review sites are a window into the organization that can no longer be manipulated by fake reviews.
In its Final Rule, the FTC clarified the scope of various rules to address specific activities or conduct that could harm consumer and avoid ambiguity or overbreadth. This Final Rule will go into effect sixty days after publication in the Federal Register, scheduled on or around October 14, 2024. The new definition was introduced to clarify public confusion about what “fake” means. According to the Final Rule, “fake indicators of social media influence” encompass indicators created by bots, fake accounts that do not belong to real individuals, accounts made using someone’s personal information without permission, hijacked accounts, or any indicators that do not accurately represent a real individual’s or entity’s activities, opinions, findings, or experiences.
The Commission clarified that a company would not be considered to be selling “fake” indicators if it awards legitimate indicators based on objective criteria that genuinely reflect the users’ influence, even if some bad actors manage to deceive the company. The suggested regulation clearly instructs businesses to implement measures for compliance. Companies need to reduce risk by establishing guidelines for gathering and managing consumer reviews. Those that work with advertising agencies should also oversee these agencies, which may involve training them on FTC standards. Additionally, businesses utilizing generative artificial intelligence (AI) must ensure that their software does not alter, remove, or distort reviews.
Along with other businesses, a dealership is prohibited from using reviews written by its officers, managers, employees, agents, or their close relatives if the business is aware that these reviews will mislead without a “clear and conspicuous” disclosure. Such a disclosure must be “easily noticeable and easily understandable to ordinary customers.” Businesses cannot share testimonials from insiders without clearly revealing their relationships and must avoid soliciting reviews from company employees or their relatives if they knew or should have known about these relationships. However, this rule does not apply to 1) general requests for reviews from customers about the product or service or 2) reviews posted on a site simply because the business hosts consumer reviews.
Businesses are forbidden from offering compensation or other incentives in exchange for consumer reviews that express a specific sentiment, whether positive or negative. This includes any form of payment or rewards such as money, gift certificates, products, services, discounts, coupons, contest entries, or even another review. Additionally, businesses cannot control, own, or operate a website that offers independent reviews about products or services if it includes their own products or services.
Moreover, businesses are also prohibited from using “unfounded or baseless legal threats, intimidation, or false public accusations” to prevent or remove negative consumer reviews. The rule also forbids businesses from falsely claiming that the reviews on their website represent all submitted reviews when negative ones have been hidden. Reviews can only be suppressed if this is done equally for all reviews and the suppression is due to the review containing trade secrets, defamatory or explicit content, personal information, discriminatory remarks, misleading information, or if there is a reasonable belief that the review is fake.
What’s the price tag on fake reviews and testimonials? Money — as in civil penalties of up to $51,744 per violation. Compile just five infractions, and you’re dealership could be looking at more than $250,000 in fines. For most small business owners, it’s enough to put them out of business. For the average car dealer, it’s the annual salary for a master technician. These are penalties intended to alter how it is that dealerships collect review and testimonials.
There’s one other cautionary tale – your dealership is also on the hook if your own employees post fake reviews with the dealership’s knowledge. Should that employee be terminated or quit and have some grievance with the dealership, the former employee could inform the FTC of the violation. This same scenario has taken place at several businesses, though not yet at a dealership. In short, it’s time to scrub any reviews that might violate the FTC’s new ruling.
Combatting negative reviews is truly only possible by delivering exceptional service. Transaction by transaction, day by day, month by month, one customer after another – we won’t have a need for fake reviews when we simply create a legion of raving fans who praise us wherever they can. Customer retention is the destination, but it’s the journey that matters. Do right by your customers and strive for exceptional levels of service and there’s no reason to alter the press clippings.
About the Author
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Sean Reyes oversees all marketing efforts at Recall Masters as Chief Marketing Officer. Sean also serves as the host of the FixedOps UX, a “minicast” that revolves around the fixed operations ecosystem and the tactics that build a better user experience for customers, dealership staff and other stakeholders. Sean’s experience spans more than 35 years of business development and strategic marketing experience, having developed go-to-market products and solutions for the automotive, healthcare, insurance, finance and technology industries to serve Fortune 1000 clients like American Express, Toshiba, Western Digital, Cox Communications, Novartis, Microsoft, IBM, Compaq, HP, National General Insurance, MyCustomer Data, DigniFi and several automotive affiliates and dealerships. Sean lives in Napa, CA with his wife Kathryn and spends his free time hiking, kayaking, playing guitar, going to concerts, rebuilding project cars and helping his kids embark on adulthood. |
