FTC Investigation Leads to Filing Complaint against Cosmetics Company Accused of Posting False Customer Reviews Online

Real product reviews are a great tool for helping consumers make better, informed decisions. Many of these reviews come from real customers who really used the product. Other reviews, however—particularly those on websites, in blogs, and on social media—are not from legitimate customers but come from companies that use fake reviews to paint a pretty picture of their products and boost their bottom line.

Earlier this year, the Federal Trade Commission (“FTC”) set its sights on a cosmetic company accused of posting fake consumer reviews of its own products online. According to a leaked internal email, the CEO of the company allegedly pressured employees to post positive reviews of new products that the company had recently released and even provided detailed instructions regarding what the employees should write about the product in reviews as well as how to avoid having the reviews traced back to the company’s IP address by using a VPN.

This revelation caught the eye of the FTC who has been intent on cracking down on fake consumer reviews, especially following the passage of the Consumer Review Fairness Act in late 2017. The FTC launched an investigation of the cosmetic company which confirmed that the mandate to leave false reviews came from the top of the company. On October 21, 2019, the FTC brought a complaint for two violations under the Federal Trade Commission Act: (1) making false or misleading claims that the fake review reflected the opinions of ordinary users of the products and (2) deceptively failing to disclose that the views were written by the company’s CEO and her employees.

In the course of its investigation, the FTC uncovered an email allegedly from the company’s CEO providing detailed, step-by-step instructions on how to leave false reviews online. The email, which the complaint quotes at length, instructs employees to “ to create 3 accounts on Sephora.com, registered as a different identities (sic).” The email goes on to instruct employees of the cosmetic company “clear your cookie history EACH TIME [before leaving additional reviews]” and “connect to the internet ONLY using the VPN. Make sure to choose a city of origin that goes along with where your character lives.”

In another email discovered in the course of the FTC’s investigation, an account manager sent an email to the other employees instructing the employees how to make reviews more believable and telling the employees, ironically, that “Credibility is key to the reviews!

The FTC voted 3-2 to approve a proposed settlement with the cosmetic company. In the press release announcing the proposed settlement, Andrew Smith, Director of the FTC’s Bureau of Consumer Protection states: “Dishonesty in the online marketplace harms shoppers, as well as firms that play fair and square.”  Noticeably absent from the settlement agreement is any monetary fine or penalty. The two commissioners who voted to reject the settlement raised this lack of fine or penalty in a separate dissenting statement.

Lubin Austermuehle’s Chicago consumer fraud and class action defense lawyers assist businesses accused of fraud to defend lawsuits or actions or the target of an investigation by the Illinois Attorney General or the FTC.

Our Chicago business lawyers have more than thirty-five years of experience helping business clients on unraveling complex business fraud and breach of fiduciary duty cases. Our Chicago business, commercial, and class-action litigation lawyers represent individuals, family businesses and enterprises of all sizes in a variety of legal disputes, including disputes among partners and shareholders as well as lawsuits between businesses and consumer rights, auto fraud, and wage claim individual and class action cases. In every case, our goal is to resolve disputes as quickly and successfully as possible, helping business clients protect their investments and get back to business as usual. From offices in Elmhurst and Wilmette, near Waukegan, and Oak Brook, we serve clients throughout Illinois and the Midwest.

If you’re facing an FTC investigation or a business or class-action lawsuit, or the possibility of one, and you’d like to discuss how the experienced Illinois FTC and attorney general investigation defense attorneys at Lubin Austermuehle can help defend your business, we would like to hear from you. To set up a consultation with one of our Naperville and Chicago business law attorneys and class action and consumer trial lawyers, please call us at 630 333-0333 or contact us online.

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