Launching a product or starting a business is hard. Youve spent time and money to make something great, but no one is paying attention. You need to get noticed, so you find yourself in a gray area, asking; Are paid or fake testimonials illegal? How illegal are they? Will I get caught?
Youre certainly not the first nor the last to ask these questions. Weve addressed some of the most common questions about paid and fake testimonials and provided solutions to help you solve these problems while maintaining your ethics. This post also includes rules from prominent websites, such as Google, Amazon, and Yelp, along with social media sites. We refreshed this blog post in October 2021 to include updated information.
Note: This is not a comprehensive list or legal advice. If you have questions, always consult an attorney.
Are Paid or Fake Testimonials Illegal? Questions and Solutions
Are Fake Testimonials Illegal?
Yes.
Under 15 US Code § 45, the Federal Trade Commission [FTC] has the power to stop and penalize parties using unfair or deceptive acts or practices in or affecting commerce. This makes it a crime to break official rules imposed by the FTC. And the FTC forbids the use of fake testimonials.
Dozens of FTC documents explain the details of misleading advertisements, but it boils down to a simple Truth in Advertising statement; When consumers see or hear an advertisement, whether its on the Internet, radio or television, or anywhere else, federal law says that ad must be truthful, not misleading. The FTC had made a number of guides explaining how truth in advertising works in different situations, but fake testimonials are actually illegal under Section 5 of the FTC Act [15 USC 45].
Fake testimonials are considered false or deceptive advertisingand therefore against the lawfor several reasons. First, they are not based on a real customers experience, which a testimonial must be. Second, it misleads the customer. Claiming a happy customer exists when they dont is misleading in itself, but whatever the fake testimonial claims is also misleading. Third, it encourages customers to spend money on a product or service they otherwise might not, thereby financially defrauding the customer, which is an especially notable offense for the FTC.
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Are Fake Testimonials Illegal on Third-Party Websites?
Yes.
Reviews and testimonials on sites like Google, Yelp, and Amazon can go a long way towards increasing a businesses popularity. Some business owners have been tempted to create false reviews on these sites. Not only is this practice forbidden by the FTC, but these websites also take a hard stance against it.
Youll find Googles policies on reviews in the Maps User Contributed Content Policy since Reviews are submitted through the Maps tool.Fake reviews decrease the overall reputation of the site itself and make users less likely to trust it. For this reason, among others, every major review site, including Google, Amazon, Yelp, TripAdvisor, and others, have all clearly stated that reviews must be true statements by real customers.
Are Fake Testimonials Illegal on Social Media?
Yes.
Social media has become a prominent tool for marketing. This includes sharing reviews and testimonials. With the ease of sharing information to be seen by millions, social media may seem like the go-to place to create fake testimonials or reviews. However, the FTCs rules still apply here and expressly forbid fake testimonials, reviews, and endorsements on social media.
Recently, the FTC sent a notice of penalty to more than 700 companies, including Amazon.com Inc. and Facebook Inc, for fake reviews and misleading endorsements online. There is a fine line between authentic content and advertising when it comes to social media. This has led to an increase in deceptive endorsements across various social platforms.
The rise of Influencer Marketing is a large contributing factor to the recent penalities. The company and endorser need to understand the rules and guidelines in place to ensure the endorsement is stated clearly for all to see. To assist businesses and influences, the FTC has put together a guide for advertising endorsements.
How Do I Get My First Testimonials?
Many businesses use fake testimonials when they dont have any of their own, often when theyre new. This is a crime. Its deceptive to customers, unfair to competitors, exposes you to liability, and isnt good for your reputation. So what can you do instead?
Develop a system to get your first testimonials
- If you have a new product, try getting your first testimonials before you launch. Talk to your product testers. These people helped you make the product great, and their input may help convince other customers too. Since youre giving these people the product for free, make sure you disclose this.
- If you have a new business, get your first testimonials with your grand opening event. Set up a kiosk, hand out surveys, conduct a contest or giveaway, or ask your first visitors to share their experience. A testimonial collection tool like Boast makes it easy to capture testimonials using a laptop computer, tablet, or smartphone at your grand opening.
- If youre combating bad testimonials or reviews, show you have fixed the problem and demonstrate it. If you have a business, hold a celebratory event and capture testimonials there. If you sell a product, give away some free samples, but make sure youre following the rulesof honest testimonials. Appeal to your existing customers in an email or social media campaign.
- Remember, not all bad testimonials are bad news. Companies with 100% glowing reviews make customers suspicious. A few critical comments will show that you are not using fake testimonials or deceptive advertising.
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Are Paid Testimonials Illegal?
Yes, with some exceptions.
Many of the same laws which make fake testimonials illegal also make paid testimonials illegal. There are some differences, however, since paid testimonials can be based on real customer experiences.
The FTCs Guides Concerning the Use of Testimonials and Endorsements in Advertising address how 15 USC 45 applies to testimonials, including paid testimonials. These guides and others lay out legal [and illegal] practices for testimonials or reviews on sites like Yelp, TripAdvisor, Google Business Reviews, and others, as well as any testimonials you use in advertisements, on your website, or elsewhere.
According to these guides, legal testimonials must adhere to all of the following;
- Made by a real customer or user of the product or service
- Based on a real users experience
- Be an accurate description of expected or normal results
- Not influenced by money, gifts, or publicity unless it is clearly disclosed
- Not influenced by a familiar or business relationship [such as employer-employee]
- Not edited or altered so to change the message
This means paid testimonials are illegal unless; the company or person giving the testimonials clearly states they are being paid and the statement is still true and accurate. The FTC also makes it clear that gifts such as a free trial of the product or service, a gift card, a giveaway, or any other incentive are a material relationship that must be disclosed.
Are Paid Testimonials Illegal on Third-Party Websites?
Yes, with no exceptions.
While the FTC allows paid testimonials as long as the testimonial is still a real account by a real customer, third-party sites take a harder stance on this. On Google, Amazon, Yelp, and other major review sites, paid testimonials are expressly forbidden.
Googles review policies are clear on this matter. They explicitly state in their review guidelines: Dont offer or accept money in exchange for reviews.
Amazons review policies are also clear. They do not allow reviews in exchange for products, money, rewards, or other reviews.
Yelp actually takes a firm stance over the previous two. Not only do they forbid paid reviews, but they forbid asking for reviews altogether. Yelps states in their Guidelines: Dont ask for reviews and dont offer to pay for them either: Please dont ask your customers to review your business on Yelp. You should also never offer compensation [discounts and freebies count too] in exchange for reviews.
Yelp takes an even harder stance, stating that soliciting reviews in any way is not acceptable.Though these are only three of the dozens of different review sites, its unlikely youll find one that does accept paid reviews. With the leading review sites taking this stance, other, smaller sites probably wont fight the trend. Moreover, allowing paid reviews would tarnish the reputationand therefore the valueof the site.
Are Paid Testimonials Illegal on Social Media?
Yes, with some exceptions.
As we discussed previously, social media is a primary tool to share branded content. Social media sites like Facebook and Instagram place the responsibility on the endorser to tag the business when there is an exchange of value. Additionally, sites like Twitter require you to include #ad to inform people the endorsement is paid. Be sure to check each social media sites rules regarding branded and endorsed content to ensure your paid testimonials are legal.
Apart from the individual social sites rules and guidelines, the FTC guide applies as well. As we stated above, legal paid testimonials and endorsements must adhere to all of the following;
- Made by a real customer or user of the product or service
- Based on a real users experience
- Be an accurate description of expected or normal results
- Not influenced by money, gifts, or publicity unless it is clearly disclosed
- Not influenced by a familiar or business relationship [such as employer-employee]
- Not edited or altered so to change the message
How Do I Get Customers to Leave Reviews?
Getting a customer to take time out of their day to leave a review can be tough. Customers have a lot of demands on their time, so how can you compete without a payment?
- Go above and beyond. If you truly deliver an exceptional customer service experience and then ask for a testimonial, many customers will oblige.
- Forge a relationship. Find out what your customers care about and give it to them. Are they looking for a company with good ethics? Someone with knowledgeable experts? Personal service? Delightful ambiance? The customers that repeatedly buy, visit, or work with you for a long time are the customers that support you and will give testimonials.
- Make it easy. Make your customers as comfortable as possible when giving reviews. Provide question prompts, so they dont have to search for something to say. Allow them to share a testimonial with just a few clicks.
- Ask at the right time. When a customer comes in for an appointment or a regular visit, ask if they have a minute to share their thoughts. Or, if an online purchase was completed, ask for a testimonial when you ask how their experience was. [If you are asking for reviews for a third-party site, make sure the site allows this practice].
- Be sincere. While paid and fake testimonials rely on deception, real testimonials allow you to just be yourself. Tell the customer what you think of your relationship and why their public approval is important to you.
- Have a system and a plan. Testimonials dont just happen; you have to ask for them. Have a plan and system for gathering and managing testimonials, such as an automated email campaign, an in-person script, or a video app like Boast.
Download the Testimonial Request Toolkit
How Illegal Are Paid or Fake Testimonials?
So paid and fake testimonials are against the law, but just how illegal are they? Whats the punishment?
Thousands or millions of dollars in penalties and civil suits.
Each FTC violation is subject to a $10,000 penalty under 15 USC 45. And it doesnt stop there; theres also a fine of $41,484 each day a deceptive ad runs. For many big corporations, this might not be enough to stop paid or fake testimonials. The FTC can and has filed civil actions against larger businesses with judgments in the millions of dollars. The more widespread, deliberate, misleading, or damaging a deceptive ad is, the bigger the civil case will be. The FTC can also order businesses to admit to and correct deception or return money to consumers they deceived.
In 2019, the FTC fined a business 12.8 million for buying fake Amazon reviews. This was the first time the FTC entered the battle against fake Amazon reviews, but its unlikely to be the last.
What About Paid or Fake Testimonials on Third-Party Sites?
Besides being against the law, businesses that host reviews and testimonials are also fed up. Theyve changed their terms of service agreements to stop incentivized reviews altogether, and theyll remove or flag reviewers or businesses who violate the agreements. Amazon sued over 1,000 offending businesses, reviewers, and sites in 2015. Yelp also sued, bringing offending companies and reviewers to court for fraud.
What About Paid or Fake Testimonials on Social Media?
In March 2020, Teami LLC, a detox tea company, settled a lawsuit with the FTC regarding deceptive health claims and endorsements by well-known social media influencers who did not adequately disclose that they were being paid to promote its products. The FTC imposed the tea company with a $15.2 million judgment, which was suspended to an upfront payment of $1 million, based on the Teami LLCs inability to pay the full judgment.
Will I Get Caught?
Paid and fake testimonials are illegal, and they can carry harsh penalties. But some business owners still ask, will I get caught?
Most likely, yes.
The FTCs blog is filled with hundreds of cases theyve brought against small and large businesses. Big businesses like Volkswagen, small B2C trampoline sellers, B2B freight brokers, marketing companies, and many more have all been caught using paid reviews or fake testimonials to deceive consumers, and theyve paid thousands, even millions of dollars. And there are likely many other cases that dont make it to the blog.
Many of these cases are first brought to the FTCs attention by suspicious or angry customers, competitors, third-party websites, consumer protection groups, or local governments. Regional FTC offices and investigators address complaints and sometimes work with local law enforcement or district attorneys to stop deceptive practices locally. Third-party sites follow users trails to track down fraudsters and file civil suits against them or create an automated screening process to prevent fake testimonials.
Customers have also taken notice of paid and fake reviews. Several plugins and apps now exist that will point out fake reviews as customers shop online. These plugins take note of generic terms, grammar mistakes, or other common red flags that arent present in real, trustworthy reviews.
In essence, if its making a difference in customers minds, the FTC, other websites, or other customers will notice. And if its not making a difference, is it worth putting your reputation on the line for?
Download the Testimonial Request Toolkit
Before you start asking if paid or fake testimonials are legal, ask yourself if its worth it. There are many ways to get real, honest testimonials and win real customer approval without sacrificing your reputation.