Scams and online retailing are booming businesses.
We often receive questions from clients about the legalities surrounding online marketing and e-tailing. Let’s take a look at some frequently asked questions.
Does it violate the law to purchase and sell fake reviews?
Fake reviews violate guidelines laid out by the Federal Trade Commission.Com disclosures, also known as the Online Marketing Holy Book. Judges have described counterfeit checks in the past as “false” and “misleading,” and the FTC successfully sued buyers who bought fake reviews under the Federal Trade Commission Act. Fake reviews are unlikely to land people in jail.
Can I sue them? Can I sue the other person?
People are increasingly using fake negative reviews to boost their marketing. Is it legal to do this? It depends…
100% false and fake: If a business purchases fake reviews and specifically requests negativity and then posts those on a competitor’s webpage, these reviews may be deemed defamatory. This would be “false” and “misleading” advertising. In this way, if they are caught, the perpetrators could face two lawsuits: one from the business that was slandered and another from the FTC.
50% false and fake: An individual thinks, “I know! I will buy the product/hire a service. No matter what happens, I will write a negative review. “It’s legal because I purchased the product or service.” We’re now navigating some murky legal terrain, so do your wellies.
Anyone has the right, of course, to purchase a product or a service and review it online. This is a free nation. You have every right to express your opinion on consumer review sites if you do not like a particular product or service. You can’t, however, intentionally lie about a service or product with the intent to harm the business or drive traffic to another company.
Is it against the law to purchase a product from a competitor, experience a negative experience, and then share this experience honestly? Most likely not. Cover your rear end and disclose your “competitor status” in the review. You can also say you are “in the same industry,” but this is more ambiguous and, therefore, has a greater chance of being considered “misleading.”
100% true: Once again, nothing stops anyone from posting honest reviews of the products and services of competitors. You should still disclose your competitor’s status.
How can I inform consumers about my products before they buy them?
The Federal Trade Commission has a list of disclosure requirements for brands, which you can find in its Disclosures. It is important that all business owners read, understand, and adhere to it.
In general, businesses should make the following information clear to customers before they purchase:
- Cancellation policies and returns
- Payment policies and practices
- Existence of any recurring charges
- Data Collection and Sharing Policies
I am a foreigner living outside the United States. I just received a notice from the Federal Trade Commission. What is it, and do I, as a foreigner, have jurisdiction?
The United States Federal Trade Commission (FTC) is a quasi-governmental organization that monitors consumer rights. Consider the FTC the watchdog for the country’s consumers. The FTC is responsible for a wide range of issues relating to marketing and commerce, including standards for online promotions.
FTC employees and commissioners conduct investigations into brands and businesses that are suspected of violating online marketing laws and regulations. They work with state attorneys generals to file formal charges against people and companies who they believe have broken the rule.
Most marketing violations are punished with fines. Under certain circumstances, the agency can freeze wages or even repossess assets, including cars, homes, and clothing. In some cases, help can be seized under the names of family members and not just those belonging to the offender.
Federal Trade Commission has the authority to pursue alleged violators outside the United States who market to US citizens. When on the trail of a trans-border offender, the FTC often works with officials from other countries. The Canadian Competition Bureau has a close relationship with the FTC.
Foreign FTC cases are not always successful, particularly when the laws of the country where an alleged perpetrator lives do not match US standards. It is often difficult to collect fines from non-US residents.
What United States laws regarding marketing should I be aware of and follow as someone who promotes online products and services?
The FTC says that the.Com Disclosures is the most important guide for online marketing in the United States. It “describes what businesses should take into consideration when developing online ads to make sure they are compliant with the law.”
Businesses and marketers must also be aware of the following:
- Children’s Online Privacy Protection Act (COPPA): The only federal law on online privacy is COPPA. Take the time to learn how COPPA regulations operate, even if your company does not have a website, product, or service. This is especially important if you’re a plugin or application developer. COPPA regulations are a major concern for many businesses, but they don’t know it.
- Gramm Leach-Bliley Act Also known as the Financial Modernization Act or GLBA, this law has significant implications for businesses and marketers. The GLBA applies not only to the creation of promotional materials and content but also to the collection and use of data about current and potential clients. The GLBA contains parameters regarding the collection of financial information and personally identifiable data.
- Federal Trade Commission Act This is the law that gives the FTC the authority to initiate investigations and punish parties who engage in “unfair” and deceptive marketing and promotion.
- California Online Privacy Protection Act California is the state with the strictest online privacy laws in the country. CalOPPA is required if you run a commercial site and you market to California residents or accept orders from them.
- European Cookie Laws: In general, European countries have more strict online privacy laws than Canada and the United States. If you want to be safe and run a website that is commercial but allows international interaction, then follow the UK cookie laws and regulations.
Consult an online and mobile lawyer. Depending on the location of your company’s headquarters, there may be regional regulations that apply. The structure of your company could have an impact on legal obligations. Speak to an Internet lawyer about your specific operation to find out which Internet laws are applicable to you.