Incentivized Negative Reviews Still Need Disclosure!

There, we thought we would put the whole takeaway in the headline for those busy readers who really want a one-sentence executive summary.

We are a bit surprised at the confusion in the market about what is required for disclosures under any sort of consumer testing program. If you pay or give free product or anything over de minimis value to a consumer in exchange for writing a review, there must be a material connection disclosure. It is not sufficient if you reimbursed for bad reviews as well as good ones. The latter still seems to be a common misconception. And yes, it is bad to incent only for good reviews. So bad that it would be a violation of the FTC Consumer Review Rule and hence beget penalties. But any incentivized review needs a disclosure. This has long been clear under the FTC’s Endorsement Guides.

NAD looked at a Facebook group run by New Zealand consumer products company Zuru. Procter & Gamble (P&G) brought a challenge to the Facebook group Zuru ran, where it would list the products for which it wanted reviews. Members of the group could go to a retailer and buy a Zuru product online and submit a review. They would upload the information about where they got the product to a linked Google spreadsheet, along with a picture of the review they submitted. They would then get reimbursed for the product in full. P&G noted that nowhere in the Facebook group or with the instructions in the Google spreadsheet did Zuru tell its Facebook group members to disclose their material connection to the company.

Zuru shut down the group and committed to update its practices going forward when it solicits and incentivizes for any review, so NAD did not go too deeply into the merits. But NAD’s recommendation is interesting. Remember these are not reviews posted on the Zuru site, where takedown would be easy, but rather third-party retail site reviews. NAD recommended Zuru “make reasonable efforts to have any recent reviews of current products revised to include any necessary disclosure or to notify third-party channels that these reviews were incentivized.” Lots to unpack there. P&G said the program went back six years. NAD focused only on recent reviews of current products. It may be that this simply meant any reviews for discontinued or updated products did not need correction. But the focus on “recent” as distinct from all reviews is interesting. Additionally, the request to notify retailers was of note. Presumably Zuru, via its Google spreadsheets, knew exactly every customer who participated, including where they purchased the product, and had a copy of the review. So identification of such reviews should have been simple. It will be interesting to see what third-party retailers do with this information, since the reviews were verified but the retailers did not solicit the reviews nor incentivize for them.

The case serves as a good reminder to keep on top of all affiliate and consumer trial programs, even fairly small activations, and to require a material connection disclosure for any incentivized review – good, bad or ugly. Even if this is not a top enforcement priority, competitors are always watching.