- There are four main types of review platforms under the FTC guidance: but closed vs. open systems is the main distinction.
- Not all rules apply to all categories. The FTC is trying to enforce transparency during review collection, moderation and publication.
- Limited FTC bandwidth means uneven or selective enforcement. Closed review platforms will be the most likely targets.
In addition to the Fashion Nova fine for review suppression and new business marketer guidance, the FTC last week released new guidance for review platforms (also available in a PDF version if your CEO's eyes glaze over with too much text).
Defining 'Review Platform'
Exactly what is a review platform? The FTC notes, "different types of companies are involved in collecting, moderating, and publishing reviews, so the same processes won’t necessarily make sense for all of them." The agency distinguishes between "open" systems that allow all consumers to submit reviews, while others use "closed" systems that limit collection to verified buyers or users."
Review platform guidance seems to apply to four groups of players:
- Companies that built their own review solicitation process for gathering reviews at scale.
- Closed platforms such as Podium, GatherUp and Birdeye that provide tools to automate collection of customer reviews and publication, but leave moderation to the business.
- Closed platforms such as Yotpo and Trustpilot that not only automate collection but manage moderation as well.
- Open platforms such as Google, Amazon, Tripadvisor, and others, that allow anyone to post and moderate mostly using automation.
The FTC acknowledges that there are differences in how each of the above gather, moderate and display reviews. It says, however, "whatever your business model may be, you should be transparent about your review-related practices and should pay attention to several basic principles that derive from Section 5 of the FTC Act." Section 5 empowers the FTC to enforce the prohibition of "unfair or deceptive acts or practices in or affecting commerce."
The basic principles to stay in compliance with Section 5 are broken into three categories: review collection, moderation and publication. Obviously not all guidance applies to all types of platforms (emphasis below is mine and reflects the points most salient to the closed agency and smb review systems).
- Don’t ask for reviews only from people you think will leave positive feedback.
- If you offer a review incentive don’t condition it, explicitly or implicitly, on being positive.
- Don’t prevent or discourage people from submitting negative reviews.
- Have reasonable processes in place to verify that reviews are genuine and not fake, deceptive or otherwise manipulated. As technology and threats change, be proactive in modifying and upgrading your processes.
- Don’t edit reviews to alter the message. For example, don’t change words to make a negative review sound more positive.
- Treat positive and negative reviews equally. Don’t subject negative reviews to greater scrutiny.
- Publish all genuine reviews and don’t exclude negative ones.
- Don’t display reviews in a misleading way. For example, it could be deceptive to feature the positive ones more prominently.
- If you display reviews when the reviewer has a material connection to the company offering the product or service — for example, when the reviewer has received compensation or a free product in exchange for their review — that relationship should be clearly and conspicuously disclosed.
- Clearly and conspicuously disclose how you collect, process, and display reviews, and how you determine overall ratings, to the extent necessary to avoid misleading consumers.
- Have reasonable procedures to identify fake or suspicious reviews after publication. If a consumer or business tells you a review may be fake, investigate and take appropriate action. That may include taking down suspicious or phony reviews, leaving them up with appropriate labels, issuing an alert about them, and addressing the issue with those responsible for it.
Reading the Guidance and Risks
Obviously, some of this guidance applies more to the Googles and Amazons of the world than to the platforms that help businesses solicit and manage reviews. I have bolded the guidance above that I think SMB-leaning review platforms need to pay attention to. And it is guidance that many of the tool-based platforms currently play with fairly loosely.
So what risks do review platforms have? The likes of Google and Amazon, where the biggest problems lie, are protected by Section 230. They probably have the least to worry about. While the FTC might take to their bully pulpit to get Google to temporarily crack down on fake reviews, with Google's teams of lawyers, their broad Section 230 protections and view of the long game, Google can safely ignore most of what the FTC would like to see in terms of preventing fake reviews.
The mortals amongst us probably have greater risks. As part of these review related announcements, the FTC emphasized that they had sent letters to 10 review management platforms highlighting gating or review suppression on their websites. In making marketing practices that often fly under the radar more obvious, these platforms opened themselves up to critical oversight.
From that letter:
One of our concerns is when companies take improper steps to avoid collecting or publishing negative reviews. Examples may include asking for reviews only from those likely to leave positive ones, preventing or discouraging submission of negative reviews, subjecting negative reviews to greater scrutiny, refusing to publish negative reviews, or otherwise not treating positive and negative reviews equally.
[DESCRIPTION OF AND QUOTATION FROM RECIPIENT’S WEBSITE.] The provision or use of this functionality would violate the FTC Act if it results in a misleading impression about what consumers think about a product or service.
You should review your policies and practices to ensure that you are neither engaging in any improper step described above nor providing clients with the means to do so. Pursuant to this review, you should terminate any services that allow for or result in consumer deception.
In the same vein, if you recall, Yotpo was singled out in late 2020 by the FTC for non-compliance with the ideals of transparency. The letter points our their "sins" and I think that this is the real guidance that review platforms should pay attention to.
From that agreement:
Our investigation concerned whether Yotpo’s star-rating and sentiment filters provided its clients with the means and instrumentalities to easily and deceptively suppress negative product reviews on their websites and mislead consumers that the reviews displayed accurately reflected the views of all purchasers who submitted reviews.
Upon careful review of the matter, FTC staff has determined not to recommend enforcement action at this time. In reaching this conclusion, we considered a number of factors, including Yotpo’s commitment to implement measures to protect against the misuse of its review management services to suppress or delay the posting of negative product reviews.
Under-resourced and under-staffed, the FTC has to pick and choose targets for maximum visibility and effect. Review platforms are therefore more vulnerable to enforcement than small businesses. Review platforms with large customers that violate transparency principles are an obvious target. That Fashion Nova was a Yotpo client would lead one to believe their excesses were likely surfaced in the Yotpo audit.
It would seem to me that the only thing worse for the reputation of a review platform than receiving an FTC fine would be for one or more of their clients to receive fines based on the platform’s behaviors.
In the end Yotpo avoided fines because :
…Yotpo is implementing clear and prominent guidance to its clients on their need to promptly post reviews, including negative reviews.1 Yotpo will also automatically post negative reviews that have not been promptly reviewed and acted upon by its clients.
Yotpo's model is the path companies that rolled their own review system and closed platforms, like Birdeye and others, will have to move towards.
In the short haul, the FTC will be too busy with their antitrust efforts to do much enforcement. However, reviews play too important a role in ranking and consumer decision-making to be ignored. Sooner or later the FTC will focus on them broadly -- and critically.
The closed review platforms that don't change fast enough will likely be their targets. In our next installment we will take a look at who those 10 are and what "sins" the FTC suspects them of committing.