In the US, the Federal Trade Commission (FTC) (which performs a similar consumer protection role to the Canada's Competition Bureau) recently released two guidance documents that outline key principles to help marketers and platforms that are involved in collecting, moderating and publishing consumer reviews comply with consumer protection law. At the same time, the FTC announced that it would be fining an online retailer, Fashion Nova, $4.2M for suppressing negative reviews. Considering false or misleading online consumer reviews are also an area of active enforcement in Canada, the FTC's guidance is another informative resource to help organizations ensure their ratings and reviews practices are compliant.
The new guidance
In January 2022, the FTC published two related, yet separate documents - one for marketers and one for review platforms – that outlines key principles for collecting, moderating, and publishing reviews in a manner that is unlikely to mislead consumers. Considering the alignment between the FTC and the Competition Bureau in consumer protection matters, Canadian organizations should take note of these guidance documents as another informative resource to help ensure their ratings and reviews practices are compliant.
Soliciting and paying for online reviews: a guide for marketers
The guide for marketers offers "dos and don'ts" for businesses that are soliciting online reviews. A few key takeaways:
- Disclosure is key: Marketers may only ask friends, family and staff to provide reviews if the nature of their relationship is disclosed within the review. Where platforms allow incentivized reviews, this incentive must be disclosed.
- "Review gating" – the practice of only collecting reviews from consumers who are expected to give a positive review – will not be tolerated. This includes offering an incentive that is conditional on providing a positive review.
- Avoid comparison websites that offer ratings and review placements in exchange for a fee in particular those that offer better ratings, reviews, or placement in exchange for a fee.
Featuring online customer reviews: a guide for platforms
The guide for platforms is divided into three sections (which are respectively summarized below) that set out key principles for how to collect, moderate and publish reviews and applies to any website or platform that features reviews.
- Collection: Rules applicable to the collection of reviews largely echo the rules for soliciting reviews contained in the guide for marketers. Importantly, do not target positive reviews, do not offer incentives for positive reviews and do not discourage or prohibit negative reviews. Any incentives that are offered must not be conditioned, either explicitly or implicitly, on the review being positive.
- Moderation: The FTC recognizes that companies may moderate reviews (e.g. to enforce terms that prohibit obscenity and harassment). However, you must treat negative and positive reviews equally, and you must not edit reviews to make them sound more positive. Further, all companies must have a reasonable mechanism in place that can verify reviews as genuine.
- Publication: The FTC advises platforms to make choices that favour transparency and listed important principles to follow. For example:
- Do not exclude negative reviews or display reviews in a misleading way (i.e. feature positive reviews more prominently).
- Within the review, clearly disclose when a reviewer has a "material connection" to the company. Companies must also disclose all review collection and publication practices that are necessary to avoid misleading consumers.
- Set up reasonable procedures to identify fake or suspicious reviews.
What this means in Canada
False or misleading online reviews is also an area of active enforcement for the Canada's Competition Bureau. The Competition Bureau often collaborates with the FTC and other of its international partners to align on best practices to help protect Canadian consumers from deceptive marketing practices. The FTC's guidance is another informative resource to help organizations ensure their ratings and reviews practices are compliant. Organizations should take this as an opportunity to audit their current practices to ensure they comply with applicable law.