On Tuesday, the Federal Trade Commission has made an announcement about a settlement with its first case against using fake reviews on e-commerce websites to sell products online. The defendant in this case was a New York-based company Cure Encapsulations Inc., and the owner Naftula Jacobwitz.
According to the accusations of the FTC, the owner has paid a third party website to post reviews on amazon.com to boost the ratings and thereby influence the sale of the product online.
Cure Encapsulations sold pills that promote weight loss as they came with an ingredient known as ‘garcinia cambogia.’ This ingredient is a tropical fruit that is also known as brindleberry. It is said to have certain natural tendencies to aid in weight loss. These pills were sold as a weight loss supplement under the name of ‘Garcinia Cambogia’ itself.
Based on FTC’s complaint, it came to light that the owner Jacobwitz paid www.amazonverifiedreviews.com, a website that primarily accepts payments to post favorable reviews. It was revealed that Jacobwitz emailed the operator of the website offering to pay $1000 for 30 favorable reviews.
Followed by this, the website went on to give 30 fake favorable five-star reviews due to which the sales picked up. Claims like weight loss up to 20 pounds as well as reduced or blocked the formation of new fat cells were a part of the fake reviews.
A judgment of 12.8 million that is to be suspended upon payment of $50,000 to the FTC as well as certain unpaid tax obligations was the proposed settlement. The ban of any claims regarding fat-blocking, weight-loss, disease-treatment was imposed on Cure Encapsulations.
They can only make these claims in the future if they have reliable evidence from clinical trials. They are also obligated to stop posting any fake reviews henceforth and help Amazon in recognizing the fake reviews so as to eliminate them.
Despite the algorithms and safety measures taken by Amazon.com, there are many instances like these where few companies or products chose manipulative practices to boost their sales. Sadly, practices like these create mistrust and negatively impact both the buyer and seller as well.