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Advertising, Marketing & Promotions Alert >> Automobile Shipment Broker Settles with FTC Over Charges that It Misrepresented Online Customer Reviews

March 30, 2015

AmeriFreight, Inc., and its owner, Marius Lehmann, agreed to settle a complaint brought by the Federal Trade Commission (FTC) claiming that the company and its owner failed to disclose that online customer reviewers were compensated with discounts and other incentives to review the company’s services.

The FTC’s complaint against AmeriFreight, which arranges shipment of customers’ cars through third-party freight carriers, charged the advertiser with misrepresenting online reviews by failing to disclose that it gave cash discounts or benefits to customers to incentivize their posting of online reviews.

In its complaint, the FTC asserted that AmeriFreight provided customers with a discount of $50 off the cost of AmeriFreight’s services for agreeing to review AmeriFreight’s services online. According to the FTC, AmeriFreight first disclosed full written details regarding the online review discount by including them within the customers’ written sales quote and order confirmation form. Notably, if the customer did not want to review AmeriFreight’s services, the cost of the services was increased by $50.

In addition, the FTC contended that AmeriFreight informed customers that if they wrote an online review they automatically would be entered into a monthly contest for the “Best Monthly Review Award” where they could win $100.

The FTC alleged that AmeriFreight did not direct customers to disclose in their online reviews that they had been compensated $50 to post the review or that they were eligible to receive an additional $100 if their review was selected for a “Best Monthly Review Award” – and that the majority of the online reviews of AmeriFreight’s services failed to disclose the benefits.

According to the FTC, AmeriFreight also made representations that AmeriFreight had “more highly ranked ratings and reviews than any other company in the automobile transportation business” and that its high ratings and top rankings were based on unbiased reviews of customers – representations that were “false or misleading” in violation of Section 5 of the Federal Trade Commission Act.

The settlement prohibits AmeriFreight and its owner Lehmann from misrepresenting that their products or services are highly rated or top-ranked based on unbiased customer reviews or that customer reviews are unbiased. The settlement also requires that AmeriFreight and Lehmann clearly and prominently disclose any material connection, if one exists, between them and their endorsers.

Under the settlement, AmeriFreight and Lehmann must maintain records of their advertisements and other relevant documents for five years, and must deliver copies of the settlement order to company principals, officers, directors, managers, employees, and others for 10 years. Finally, AmeriFreight and Lehmann must notify the FTC about any changes in corporate structure or affiliation with new businesses that could affect their compliance with the settlement order, which expires in 20 years.

The Bottom Line

State and federal regulators continue to scrutinize online reviews to ensure that customers are receiving authentic and transparent reviews of products and services prior to purchasing them. The AmeriFreight settlement should serve as a reminder to advertisers that all endorsers – whether these endorsers are bloggers, celebrities, or customers – must disclose their material connections with advertisers in accordance with the FTC’s Endorsement and Testimonial Guidelines.