New NAD Decision Addresses Incentivized Reviews

Kelley Drye & Warren LLP

NAD recently announced a decision involving Pyle Audio’s campaign to generate reviews for its NutriChef brand vacuum sealers. When consumers received their products, they would find a card promising them two rolls of vacuum sealing bags in exchange for leaving a review on Near that promise, the card included the words “love this” and an image of five stars. The challenger argued that this presentation suggested that consumers had to leave positive reviews in order to receive the free bags. Moreover, the card did not tell consumers that they had to disclose that they received free products in exchange for the review.

NAD started its decision by recapping previous guidance and cases – including this case that we discussed in April – holding that consumers who receive a benefit in exchange for a review should be required to clearly disclose that they’ve received that benefit. Here, Pyle did not take any steps to ensure that consumers made these disclosures. As a result, “consumers reading the reviews are left with the mistaken impression that the reviews are spontaneous . . . .” This violates the FTC’s Endorsement Guides.

In addition, although Pyle may not have explicitly required consumers to leave a positive review to receive the free bags, NAD found that because the offer was coupled with the words “love this” and an image of five stars, consumers could reasonably conclude that a positive review was required. Moreover, the card directed people who weren’t happy to contact the company for help. “Consumers may reasonably understand that that there are two mutually exclusive options — (1) leave a review and get a reward if you are satisfied with the product or (2) contact Pyle if you are not satisfied.”

For future promotions, NAD recommended that Pyle take steps to ensure that consumers disclose that they’ve received a benefit in exchange for the review. Moreover, the company should not suggest that positive reviews are required. As far as existing reviews, NAD recommended that Pyle take reasonable measures to have those reviews taken down or to modify them to include a clear and conspicuous disclosure that the consumer who posted the review received something of value from Pyle.

These types of campaigns are receiving more attention from the FTC and NAD. If your company encourages consumers to write reviews, you should take a close look at FTC guidance and recent cases to ensure that your campaign does not get you in trouble.

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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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