In the U.S., the Federal Trade Commission (FTC) has announced a penalty for all companies, advertisers, and retailers that use fake online reviews and other deceptive endorsements to deceive consumers. Apple’s App Store features reviews and 5-star ratings to measure an app’s usefulness. However, these features are abused by scammers who use fake reviews and ratings to lure users and steal from them.
The agency argues that social media has “blurred the line between authentic content and advertising, leading to an explosion in deceptive endorsements across the marketplace. Fake online reviews and other deceptive endorsements often tout products throughout the online world.” Therefore, to protect American consumers, FTC is using its Penalty Offense Authority to remind companies and advertisers of the law and the repercussions of breaking it.
Apple, Google, and over 700 companies are sent Notice of Penalty Offenses by FTC
FTC warns the industry that if they engage in deceptive practices, the agency will hold them responsible with “every tool at its disposal.” The following practices are considered deceptive by the agency:
- Falsely claiming an endorsement by a third party
- Misrepresenting whether an endorser is an actual, current, or recent user
- Using an endorsement to make deceptive performance claims
- Failing to disclose an unexpected material connection with an endorser
- Misrepresenting that the experience of endorsers represents consumers’ typical or ordinary experience
Over 700 companies are sent a Notice of Penalty Offenses to notify the recipients that they would have to pay significant civil penalties up to $43,792 per violation if they use endorsements that violate FTC rules. Apple, Google, PayPal, Samsung, Sony and other leading companies and advertisers are sent notices.
Although Apple has a review process to filter out malicious apps on the App Store, developers often complain that scam apps are infesting the digital marketplace. Scam apps use fake reviews and 5-star rating to pose as authentic apps and rob people of millions of dollars annually. In iOS 15, the company brought back the ‘Report a Problem’ link to flag scam apps but it needs to improve its review process so that the scam apps can not get on the digital store in the first place.