NAD Straightens Disclosures for Incentivized Consumer Reviews of Aligner Products

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In its latest decision regarding incentivized consumer reviews, the National Advertising Division of BBB National Programs ruled that a general disclosure is not sufficient to disclose incentivized consumer reviews on a website when there are multiple reviews. NAD also addressed consumer reviews and product rankings on a third-party website.

SmileDirectClub challenged claims by Straight Smile for its Byte teeth aligner products. The Byte website contained both video and written reviews from consumers and included a disclosure stating: “We’ve asked our reviewers to share the good, the bad, and the ugly with us. These reviews may include ones where known purchasers were given free product in exchange for their honest opinions.” Thus, the disclosure indicated that some reviews on the website were by consumers who received free product, but did not indicate which reviews those were.

The challenger argued that a blanket disclosure is insufficient and that the advertiser should have included an individualized disclosure with each review.

Both the Federal Trade Commission (FTC) and NAD have long held that any material connection between an advertiser and a reviewer must be clearly and conspicuously disclosed. This reflects long-standing guidance by the FTC in its Endorsement Guides that reviews and endorsements must reflect the honest opinion of the reviewer.

NAD stated: “Consumers are increasingly relying on reviews to make informed purchasing decisions, and therefore it is crucial that any connection between the reviewer and the advertiser that a consumer would not expect be disclosed. Consumers may assess the credibility of a neutral, unbiased review differently than one made by someone paid by the advertiser, even if the reviewer did not let the incentive influence the review. An advertiser is therefore obligated to be fully transparent and disclose when such a relationship with the reviewer exists.”

NAD determined that a blanket disclosure is not effective in putting consumers on notice that a review has been incentivized. “Consumers reading individual reviews may not see the disclosure or, even if they do see it, realize that it applies to the particular reviews they are reading. The goal of providing a disclosure is to allow consumers to assess the credibility of the review. A single, blanket disclosure tells consumers only that there may be some reviews that were incentivized and gives the consumer no way to ascertain the credibility of each review.”

NAD therefore concluded that the disclosure was not sufficient and recommended that the advertiser “take reasonable measures to provide clear and conspicuous disclosures for each incentivized review on its website informing consumers that the review was incentivized.”

NAD also addressed consumer reviews on a third-party website, BestCompany.com. NAD considered whether the content, including consumer reviews, on BestCompany.com was advertising for Byte. The advertiser argued that it is not responsible for content on Best Company’s website, including how an independent third-party site chooses to disclose incentivized reviews. NAD disagreed, stating: “It is well settled that an advertiser is responsible for its own advertising, even if distributed by a third party. Byte pays Best Company to solicit reviews and has a relationship with Best Company to promote its products. When Best Company promotes Byte’s products as a result of this relationship, it is advertising for Byte.” NAD determined that there should be a disclosure for each incentivized review.

In addition, the case involved product rankings on BestCompany.com. That website has consumer reviews in various product categories, including “invisible braces.” The invisible braces brands listed on the website included Byte, SmileDirectClub, and other competitors of Byte. The website ranked Byte the best in several areas, including “Best Overall.”

The challenger alleged that Best Company’s ranking of Byte over all other brands falsely conveys the message that the ranking is based on Best Company’s “expert recommendation” and not due to Best Company’s undisclosed relationship with Byte. In fact, according to the challenger, Best Company’s high ranking of Byte is influenced by the money that Byte pays Best Company.

NAD found that the rankings for the “invisible braces” category on BestCompany.com were influenced by the relationship between Best Company and the companies it is ranking, and that the relationship was not clearly disclosed on the website. NAD determined that companies with a material connection to Best Company will get a higher ranking not based on the experience of consumers with the product but because the relationship with Best Company will increase the metrics that form the basis for the ranking.

The Best Company website disclosed that some companies may provide compensation, but did not identify those companies. Although there was a disclosure link titled “Income Disclosure” at the top of each web page, NAD determined that the relationship between Byte and Best Company was not clearly disclosed. The disclosure read, in part, “[W]e attempt to partner with all the companies that we review, and may get compensated when you click or call them from our site.” NAD stated that “a general disclosure that some content is incentivized is not sufficient. Consumers viewing Byte’s profile will not realize that this particular company has paid Best Company.”

NAD found the rankings to be misleading: “Consumers understand rankings and recommendations to reflect honest assessments of the products based on the experience or expertise of the reviewer. When the ranking or recommendation is based upon a relationship between the parties and is not based on an honest assessment of the product or products compared, consumers are misled.”

Accordingly, NAD recommended that Byte “discontinue advertising its ranking on BestCompany.com or modify the advertising to ensure that consumers clearly understand that Best Company’s ranking is advertising for Byte and not an honest review from an independent third party.”

Why It Matters

This decision makes it clear that when there are multiple consumer reviews of a product on a website, a general disclosure that some reviews are incentivized is inadequate. Advertisers should clearly disclose when a consumer review has been incentivized. In addition, when the ranking of a product on a third-party website is influenced by a material connection between the website and the company ranked, a disclosure should be made. The decision also reiterates the principle that an advertiser is responsible for its own advertising, even if distributed by a third party.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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