As advertisers wait to see what the FTC will do after sending 700 warning letters related to influencers and incentivized reviews, the NAD has been resolving disputes on similar issues. Yesterday, NAD announced a new decision involving incentivized reviews. Although the decision is consistent with previous cases in this area, there are some nuances worth exploring.
Use of General Disclosures
Byte, a company that sells teeth aligner products, featured various customer reviews on its website. While some of those reviews were written by independent customers, others were written by customers who had received an incentive in exchange for the review. As our readers know, companies must disclose when reviews are incentivized. Here’s how Byte did it:
“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.”
Byte argued that this general disclosure was sufficient and that it was both impractical and unnecessary to individually flag each incentivized review. Although it may have been impractical to do so, NAD found that it was necessary. Readers should know specifically which reviews were incentivized.
Consumer Reviews on a Third-Party Site
NAD also considered whether customers reviews on BestCompany.com included the necessary disclosures. Byte argued that it should not be responsible for reviews on a third-party site that it does not control. Although that may be the correct analysis in many cases, the situation in this case was a little different.
NAD noted that Byte pays Best Company to solicit reviews and that it 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.” Accordingly, “Byte has ultimate responsibility for advertising claims run by Best Company on its behalf” and Byte should have ensured the each incentive review included the necessary disclosures.
Best Company ranks various invisible braces on its site, and Byte took the top place in several areas. When a site has a connection to the companies it is reviewing, that must be disclosed. Best Company did that through a link at the top of the site labelled “Income Disclosure.” Consumers who clicked on that link would find a disclosure which stated, in part, that Best Company attempts to “partner with all the companies that we review, and may get compensated when you click or call them from our site.”
NAD found the disclosure wasn’t sufficient, for a number of reasons. Consumers would not see the disclosure, unless they clicked the link, and there was nothing about the link to suggest that consumers should click on it to understand Best Company’s relationship with the companies they reviewed. Moreover, even if consumers were to click on the link, they wouldn’t be able to tell which companies provided compensation. As above, a general disclosure is not enough.
This decision makes clear that advertisers need to clearly disclose when a reviewer – whether a customer or a review site – has a connection to the advertiser. That disclosure needs to be clear and specific, even if it difficult to make that happen. The decision also highlights the principle that if an advertiser engages another company to promote its products or services, the advertiser will likely be held responsible for the other company’s activities.