Hospitality Law Blog

Fudging a Five-Star Rating – Can It Hurt?

An online reputation can make or break a business. Though word-of-mouth is still important, most consumers today take to the Internet when looking for a place to shop, eat, vacation, or play. It is no surprise, then, that businesses want to boost their online ratings and garner gleaming reviews on sites such as Yelp, Angie’s List, TripAdvisor, Urbanspoon, and the like. Is there really any harm in requiring an employee to post a positive review under a fake name? How about paying a stranger to sing your business’s praises, even if he or she has never used its services? It may seem like a harmless form of self-promotion, but engaging in this practice can be illegal and very expensive.

Just ask the nineteen New York businesses that, after a year-long undercover investigation by the New York Attorney General’s office, agreed to pay more than $350,000 in penalties for writing or paying for fake online reviews. "Operation Clean Turf," as it was dubbed, was an in-depth investigation in 2013 into the reputation management industry and the manipulation of consumer-review websites. The investigation revealed that the businesses flooded sites like Google Local and CitySearch with fake reviews and concealed their identities through IP spoofing techniques, fake profiles, and the use of freelance writers in foreign countries.

As businesses have become increasingly concerned with their online reputation, search engine optimization (“SEO”) companies are in high demand. These companies offer online reputation management as part of their services, but businesses may fail to understand how some SEO companies operate – by soliticiting fake reviews and establishing phony online accounts. These techniques have become so prevalent that they even have a name. “Astroturfing” is the practice of preparing or disseminating a false or deceptive review that a reasonable consumer would believe to be a neutral, third-party testimonial. According to New York Attorney General Eric T. Schneiderman, “Astroturfing is the 21st century’s version of false advertising, and prosecutors have many tools at their disposal to put an end to it.”[1]

While a sham review about a restaurant’s Sunday brunch could be harmless, consider false reviews raving about a surgeon’s work, a babysitting company’s background check process, or a lawyer’s success rate and you can more clearly see how a little white lie can become an ambush for the non-suspecting consumer who relies on it. A wide variety of businesses, including a dental practice and charter bus company, were caught in Operation Clean Turf.

The Attorney General had power to prosecute the businesses pursuant to New York’s consumer protection laws that prevent false advertising and deceptive business practices, specifically NY. Gen. Bus. Laws 349 and 350. What qualifies as false advertising varies from state to state, but consumer protection statutes generally prohibit the same kind of misconduct. In Kentucky, KRS 367.170, also known as the Kentucky Consumer Protection Act, protects against "unfair, false, misleading or deceptive acts or practice in trade or commerce.” In addition to state laws, consumers are also afforded protection at the national level from the Federal Trade Commission (FTC). The FTC was not involved in the New York investigation, but had it been, the conduct at issue would have likely violated Section 5(a) of the FTC Act, the consumer protection statute which provides that "unfair or deceptive acts or practices in or affecting commerce...are...declared unlawful." (15 U.S.C. Sec. 45(a)(1)). Businesses using endorsements or testimonials should review the FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising, as the use of these may require special, inconspicuous disclosures. At minimum, the FTC’s Guides require endorsements to reflect the honest opinions, findings, beliefs or experiences of the endorser.

Regulatory agencies are not the only ones cracking down on false advertisements. Review companies themselves seek to protect the integrity of the content that appears on their site and therefore usually include a provision in their Terms of Use prohibiting users from posting false or intentionally misleading material.  Fake online reviews can violate these provisions and constitute a breach of contract. Yelp recently targeted a San Diego law firm for allegedly posting reviews from non-existent clients. While suing for false reviews is extreme, these companies regularly use filtering software and user tips to locate deceptive content.

Fake reviews may seem like a quick fix for an imperfect online reputation, but business owners should think twice before pushing the edge of the credibility envelope. If truly false and negative online reviews are affecting business, business owners may have a claim for defamation. Business owners can also seek reprieve from negative posts by contacting the offending websites and asking for derogatory material to be removed, or by addressing customers’ feedback in-kind. If you are a business owner and have questions about advertisements or endorsements for your business, consider contacting an attorney. Keep in mind that news of a customer’s bad experience can travel faster than ever and adjust your real-world interactions appropriately.

Services may be performed by others.

This article does not constitute legal advice.

[1] New York State Office of the Attorney General. (Sept. 23, 2013). A.G. Schneiderman Announces Agreement With 19 Companies To Stop Writing Fake Online Reviews And Pay More Than $350,000 In Fines. Retrieved from http://www.ag.ny.gov/press-release/ag-schneiderman-announces-agreement-19-companies-stop-writing-fake-online-reviews-and.