Analysis

FTC's Review Guidelines Part I: Business Marketers

The FTC's new guidelines simplify many things about review solicitation and moderation, but other areas are now murkier.

Mike Blumenthal

Jan 28, 2022

Photo by Daniil Silantev / Unsplash

The FTC released new guidance for online review platforms and business marketers, defining key principles for collecting and publishing reviews.
The guidelines are much more specific than in the past and address review solicitation, moderation and working with review platforms.
Generally they're a big improvement. But some areas, such as incentives and material connections (employees, friends and family), are murky or complex.

The FTC recently fined Fashion Nova for withholding negative reviews on their e-commerce web site. At the same time, the agency released new guidance for both online review platforms and business marketers defining key principles for gathering and publishing customer reviews.

This added guidance is significant in that it attempts to clarify and be more granular in its advice around all online reviews. This is a refreshing change from the previous behavior of lumping reviews with endorsement guidance and providing little specific review guidance.

Yet the FTC's attempt to clarify has in some situations, like review incentives and who the rules apply to, has muddied the waters. It also remains to be seen if the agency will be able to do more than simply use the bully pulpit in its enforcement efforts.

The Big Picture

At the highest level the new guidance for both review platforms and businesses makes clear that:

Review gating (asking for reviews only from happy customers) and selective review and rating display (only showing reviews above a certain rating) are not allowed.
Positive and negative reviews should be treated equally, particularly if moderation is in place.
Any incentives and material connections between the business and the reviewer need to be disclosed and made explicit.

Business Marketer Guidance Details

The Business Marketer Guidance is for business owners/brands is broken into two main sections: soliciting reviews and working with other companies to help with the review process.

Soliciting reviews:

Don’t ask for reviews from people who haven’t used or experienced the product or service.
Don’t ask your staff, family and friends to write reviews of your business, at least not without ensuring that they disclose in their review their relationship to you and that you asked them to write it.
Don’t ask for reviews only from customers you think will be positive.
If you offer an incentive for a review, don’t condition it, explicitly or implicitly, on the review being positive. Even without that condition, the review should disclose the incentive, because its offer may introduce bias or change the weight and credibility that readers give the review.

Working with other companies:

Don’t participate with comparison review sites that provide pay to play for better ratings and placement.
If you pay a review platform that offers to collect customer reviews for you and improve your company’s reputation make sure that the commercial relationship with you is clearly disclosed.
Don’t misuse platform review flagging options option to get rid of honest, negative reviews.
Your business can be held responsible for SEO and reputation management firms that write fake reviews on your behalf.

What's Right and Wrong with Marketer Guidance?

The FTC (unlike Yelp) generally agrees that it is normal and appropriate for a business to ask their clients for reviews. Clearly the prohibition against only asking happy customers for reviews (gating) makes sense. And it is the business that should be responsible for actions of their SEO company on their behalf.

Making these prohibitions and responsibilities explicit is a very positive change and establishes baseline behaviors that should become the norm.

Kudos to the FTC on this front.

Allowing for employee or relative reviews, however, even with disclosure is too conditional and confusing. Ban the practice entirely, for both clarity and consistency. Virtually every major open review platform has banned this behavior and it would make sense if the FTC did as well. Consumers don't want to read what your Aunt Tilly thought of your business. How does a review like that contribute to the conversation even if the relationship is disclosed?

More importantly, allowing for incentives in any form, even with disclosure, biases any review in such a way as to make it untrustworthy. Incentives even with disclosure are a slippery slope of problematic ethics. This practice should be categorically banished.

Risks of Non-Compliance

What happens if you don't follow the rules and publish only positive reviews on your website or engage in gating?

The FTC is is largely understaffed and overworked. They tend to bring cases against egregious abusers. In the recent case, Fashion Nova was accused of not showing hundreds of thousands of negative reviews. A case that large and that visible is the kind of case that the FTC will find resources to prosecute. Most businesses do not fall into that category.

There may be some risk from your state's AG. While no state has been really aggressive on the review front, both NY and California have charged business with deceptive review practices and extracted steep fines. Very little has occurred in the other states.

If you are a business that is using a review platform, like Fashion Nova was using Yotpo and the platform gets audited, then your risks increase.

The overall risk is quite low of an FTC or State AG lawsuit. The bigger danger is that your are found out by customers and your reputation is permanently damaged.

What to Do Now

While the risks for violating the guidelines are low, it really behooves a business to develop a plan that is in compliance with the FTC guidelines.

As far as incentivizing reviews goes, even though the FTC permits it if done properly, it is best avoided. It will put you up against Google guidelines where you run the risk of having all of your reviews removed and more importantly will reduce customer trust.

Gating, long prohibited by Google, has been shown to significantly lower review counts while have little overall impact on a business's average rating. Unhappy customers will leave a bad public review whether you gate your review process or not. On average, it is not worth doing.

As for showing your actual review rating on your website, the temptation to not show negative reviews may be high. Though the reality is that consumers are not dumb and will only land on your site after having vetted you on Google and other review sites. Showing a higher score on your site for the very same reviews that the consumer already saw at Google is again a good way to violate trust.

Open the gates and be transparent. If you are not happy with your average rating, improve the processes that consumers find annoying. In the end, consumers reward integrity more than star ratings.

The Bottom Line: Keep It Simple

The FTC has an opportunity to simplify overall guidance and create consistency at the highest level amongst the biggest review platforms and the smallest business. And while they have finally created explicit review guidelines and clearly banned some practices, they have attempted to thread a needle on some topics in such a way as to continue to cloud what should be clear water.

Both the business and the FTC should keep it simple and avoid all conflicts vis-a-vis consumer reviews.

Coming next: An analysis of the online review platforms guidance.