Reputation Management and False Advertising Problems

Most businesses carefully work to protect their reputation given the importance it has on their future. This effort can be a challenge in the online world where anonymity and forgiving laws create an reputation management firm false advertising practicesenvironment ripe for abuse. Many businesses hire reputation management firms for just this purpose. While a logical move, a recent prosecution in New York reveals how careful one has to be when hiring such companies.

Section 230 of the CDA

The 1990s were a magical time for internet law. Well, “magical” might be stretching it a bit. What is true is a large amount of legislation was passed by the federal government to support the growth of the web into the massive communication platform it is today.

During this period, the Communications Decency Act was passed and signed into law. The Act was ostensibly an effort to regulate online pornography. Congress overstepped its constitutional authority, and much of the law was ruled unconstitutional by the United States Supreme Court in a case known as Reno v. American Civil Liberties Union, 521 U.S. 844 (1997). However, a few key clauses survived the Supreme Court review, and one is Section 230.

Section 230 essentially states a website shall not be liable for any statement published on it by a user. If I own a social media site known as “Flitter”, for example, Section 230 will protect me from any allegedly slanderous statements made by an individual posting on Flitter. The offended party can still go after the posting party, just not the website. This legal immunity keeps companies such as Twitter, Facebook, and other user-generated content sites from being buried under a wave of defamation lawsuits.

Abuse

Laws passed with the best intentions often end up creating the biggest problems. One need look no further than COPPA. The Children’s Online Privacy Protection Act of 1998 was designed to give parents control over the collection of data for children under 13 by companies. Unfortunately, the regulations surrounding the law has grown into such an obscenity that it now costs online businesses an average of $18,000 a year to comply with it, a rather large hurdle for start-ups.

In the case of Section 230, a significant area of abuse has arisen in the field of business reviews. Let’s assume I am a dentist in San Diego, and you are my competitor just down the road. I can hire a provider in India or Pakistan to post negative reviews regarding your business on Yelp, RipOffReport.com, and other consumer review sites.

What can you do? You can’t sue the posting operator given their location and, under Section 230, you can’t sue the site. Even if you get a default judgment against the posting party in India, most websites will just ignore it and leave the review up. Sites usually take this position even if the judge in your case orders the company to remove the review. Frankly, it is a nightmare scenario for business since there is literally no path to obtaining the removal of the offending review.

Or is there…

Reputation Management Services

Capitalism certainly has its critics, but few can assert it doesn’t provide solutions to unfilled needs quickly. In this case, an entire reputation management industry has sprung up to fight bad reviews for companies.

How do these reputation management firms work? There are a number of different strategies. “Astroturfing” is a popular approach. With astroturfing, the reputation management company tries to create a ton of favorable reviews and testimonials designed to bury any negative review so a consumer is unlikely to find it. For example, a reputation management firm might create 300 positive reviews for a business owner to bury the five negative reviews the company has on Yelp.

While there is certainly a demand for such services, a potential problem arises when the companies providing the services step over the line and violate federal and state laws.

Fake Reviews

The legal topic at issue in these matters is false advertising.  The problem is each review created in the astroturfing effort is neither objective nor authentic. Hiring a bunch of people off Fiverr or a similar site to create and post fake reviews is simply false advertising. Each artificial review presents consumers with a favorable representation of business that is not based on real interaction. Fake reviews and testimonials are illegal.  The Attorney General of New York recently prosecuted some SEO/reputation management firms for this very practice.

Operation Clean Turf

In a year-long undercover effort known as “Operation Clean Turf”, New York hunted down and prosecuted 19 companies astroturfing online. The companies agreed to terminate the practice and pay a total of $350,000 in fines.

The basis for the prosecution was as described above – false advertising. These companies were, ironically, hiring inexpensive freelancers to post fake positive reviews for clients on sites such as Yelp. The providers would use false identities to open accounts with the review sites and then post fake positive reviews. This process constituted two types of false advertising – a fake identity providing a fake review.

The companies settling with the New York Attorney General are:

  • A&E Wig Fashions, Inc. d/b/a A&E and NYS Surgery Center
  • A.H. Dental P.C. d/b/a Platinum Dental
  • Body Laser Spa Inc.
  • The Block Group, LLC, d/b/a Laser Cosmetica and LC MedSpa, LLC
  • Bread and Butter NY, LLC d/b/a La Pomme Nightclub and Events Space
  • Envision MT Corp.
  • iSEOiSEO
  • Medical Message Clinic and HerballYours.com
  • Metamorphosis Day Spa, Inc.
  • Outer Beauty, P.C., Lite Touch Plastic Surgery, P.C., Staten Island Special Surgery, P.C., Sans Pareil Surgical, PLLC
  • Stillwater Media Group
  • Swan Media Group, Inc. and Scores Media Group, LLC
  • US Coachways Limousine, Inc. and US Coachways, Inc.
  • Utilities International, Inc. d/b/a Main Street Host
  • The Web Empire, LLC
  • Webtools, LLC and Webtools Internet Solutions Ltd.
  • West Village Teeth Whitening Service, LLC; Magic Smile, Inc., aka Magic Smile
  • XVIO, Inc.
  • Zamdel, Inc. d/b/a eBoxed

Reputation Management Dead?

The New York prosecution raises a rather obvious question – is online reputation management dead?

Not at all.

Reputation management is a smart tactical move for most websites so long as the techniques used are legal. Faking reviews, testimonials and identities clearly are not.

If you are a business looking for a reputation management firm, make sure to investigate in depth how each potential firm goes about the management process. Once you are comfortable with the practices, make sure to get everything in writing including a list of the practices to be employed and those you forbid.

And what if you are a reputation management firm? The New York prosecution should act as an eye opener. You should immediately review your practices and procedures to determine whether any of them could expose you to legal sanctions. Once this is accomplished, you should consider turning the bad publicity this prosecution has given the reputation management industry into a marketing opportunity. Potential clients will be looking for a way forward. Give it to them by emphasizing your legal and ethical approaches.

In Closing

The reputation management field is one mined with legal risks. Whether you are a reputation management firm or considering hiring one, contact me to learn more about what can and cannot be done from a legal perspective.

Richard A. Chapo, Esq.