FTC Charges Skincare Company For Posting Fake Reviews

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Fox Rothschild LLPIn this day of online consumerism, the success of a product can change drastically with a simple addition, or subtraction, of a “star.” In October of 2018, a whistleblower shed light on the drastic measure one particular company, Sunday Riley Skincare, had taken to ensure its products’ “stars,” and their corresponding success, remained as high as possible.  According to this whistleblower and former employee, as well as a subsequent complaint brought by the Federal Trade Commission, Sunday Riley’s managers attempted to solidify its products’ standing in the cosmetics market by posting various positive fake reviews and attempting to bury negative reviews of their products on Sephora.com.

Between October 2015 and August 2017, Sunday Riley’s employees posted fake positive reviews on Sephora’s website, and would strategically “Dislike” negative reviews in an effort to have such reviews removed.  According to the FTC, this strategy came from the very top, with Sunday Riley’s founder urging her employees to dislike any negative reviews and use VPNs (“virtual private networks”) while posting reviews in order to hide their identity. According to its founder, this would “directly translate[] to sales” for Sunday Riley. There is even some indication that this type of behavior took place as recently as April of 2018, as interns of Sunday Riley were encouraged to write fake reviews for the company.

In its complaint, the FTC alleges that Sunday Riley committed two violations of the FTC act: 1) it made false or misleading claims that the fake reviews reflected the opinions of impartial ordinary users of the products; and 2) it deceptively failed to disclose, after implying the reviews were written by users of the product, that reviews were written by Sunday Riley employees. Shortly after bringing its complaint, the FTC approved a proposed consent order to settle these allegations. In particular, pursuant to the order, Sunday Riley would be prohibited from misrepresenting the status of an endorser or person reviewing a product. Further, going forward, Sunday Riley employees could only endorse one of the company’s products if they clearly and conspicuously disclose their connection to the products.

Not all commissioners agreed with this proposed settlement, however, as the proposed settlement moved forward by a narrow three to two margin.  Commissioners Rohit Chopra and Rebecca Kelly Slaughter voted against the settlement, and issued a separate statement in which they expressed concern that the proposed settlement does not go far enough in light of Sunday Riley’s behavior.  Notably, Chopra and Slaughter commented in their letter that the “proposed settlement includes no redress, no disgorgement of ill-gotten gains, no notice to consumers, and no admission of wrongdoing. Sunday Riley and its CEO have clearly broken the law, and the Commission has ordered that they not break the law again.”

Now, the FTC must publish the proposed settlement in the Federal Register, and open it up to public comment for thirty days.  After that time, the Commission will consider said comments and determine whether or not to finalize the proposed settlement.

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