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Customer Reviews Matter

In this age of online advertising, independent reviews by customers have become a crucial marketing tool for many businesses. Having “5-star” customer reviews is worn like a badge of honor, and companies can boast of their high customer ratings in an effort to attract other customers who look to such reviews for confirmation of the reputation of a company or the high quality of its goods or services. Given the value of such reviews, customer reviews have become subject to falsification and manipulation by companies seeking to boost their ratings and attract other customers. Such actions, however, can result in liability for false advertising, and two recent cases highlight the serious liability a company that falsifies and manipulates reviews can suffer.

In the case of Vitamins Online, Inc. v. Heartwise Inc. d/b/a NatureWise, 2:13-cv-00982 DAK (November 10, 2020 D. Utah), the plaintiff was awarded $9.5 million against its competitor due to the competitor’s misuse of Amazon’s product reviews. Vitamins Online and Heartwise are competitors in the field of vitamins and supplements. In 2011, Vitamins Online launched a garcinia cambogia supplement, and in 2012, it launched a green coffee product with Svetol, both of which became very popular on Amazon. In 2012-2013, NatureWise launched six products on Amazon in competition with the Vitamins Online products.

As part of its marketing efforts, NatureWise engaged in a pattern of falsifying and manipulating Amazon’s customers reviews. Many reviews were posted even before NatureWise began selling the products. Unverified purchasers posted 5-star reviews within minutes of each other, using similar language and cadence. NatureWise instructed its employees to engage in “block voting” – a practice in which a consumer can “up vote” good reviews and “down vote” bad reviews – the result of which meant that the positive reviews appeared at the beginning. NatureWise provided free products in exchange for reviews without any disclosure of the same. Finally, NatureWise engaged individuals to give its products 5-star reviews and told those individuals to review other, unrelated products at the same time so as not to appear suspicious.

In finding NatureWise liable for violation of Section 43(a) of the Lanham Act, the court in the Vitamins Online case found these activities to be “literally false,” and consumer deception was thus presumed. Because the court concluded that the parties were direct competitors in a sparsely populated market from 2012-2013, the court focused the plaintiff’s economic injury during those years and awarded Vitamins Online the profits from NatureWise’s sales of the competing products during those years in the amount of $9.5 million.

In another case involving false online reviews, Beyond 79, LLC v. Express Gold Cash, Inc., 6:19-cv-06181 EAW (W.D.N.Y. Dec. 15, 2020), the court denied the defendants’  motion to dismiss and found the plaintiff had properly pleaded false advertising under the Lanham Act.

Beyond 70 and Express Gold Cash are competitors that buy and sell jewelry, precious metals, and gemstones. Beyond 79 alleged that in an effort to boost its internet presence and reputation, Express Gold Cash set up websites that purported to be independently run websites that reviewed companies such as Beyond 79 and Express Gold Cash.  The websites allegedly contained reviews from customers and others that gave high reviews to Express Gold Cash and negative reviews to Beyond 79, but in reality, according to the complaint, no such customers existed. Beyond 79 claimed that one of the websites appeared to be run by a disgruntled jewelry industry professional who said he created the website to provide independent reviews. In reality, according to the complaint, there was no such person, and the photograph of the person used on the website was simply a stock photo.

Express Gold Cash moved to dismiss the complaint, arguing that the reviews made on the websites, which consisted of statements such as Express Gold Cash was “the best,” were nothing more than non-actionable “puffery.” The court was not persuaded and found that the false advertising alleged was not the statements themselves but was that these opinions were reached independently and provided by actual consumers.

The court also denied the motion to dismiss filed by the advertising agents who helped create the websites. The agents, according to the court, had much more than just passive involvement, and the facts outlined in the complaint showed that they “knowingly participated in the creation, development, and propagation of the false advertising campaign.”

The takeaway is that companies must be careful in how they obtain customer reviews. It is one thing to encourage happy customers to leave a truthful and positive review. It is quite another to do anything to falsify or manipulate such reviews.

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