Launching a product or starting a business is hard. You’ve spent time and money to make something great, but no one is paying attention. You need to get noticed, so you find yourself in a gray area, asking; Are paid or fake testimonials illegal? How illegal are they? Will I get caught?
You’re certainly not the first nor the last to ask these questions. We’ve addressed some of the most common questions about paid and fake testimonials, and provided solutions to help you solve these problems while maintaining your ethics.
Note: This is not a comprehensive list or legal advice. If you have questions, always consult an attorney.
Are Paid or Fake Testimonials Illegal? Questions and Solutions
Are Fake Testimonials Illegal?
Under 15 U.S. Code § 45, the Federal Trade Commission (FTC) has the power to stop and penalize parties “using unfair or deceptive acts or practices in or affecting commerce.” This makes it a crime to break official rules imposed by the FTC. And the FTC forbids the use of fake testimonials.
Dozens of FTC documents explain the details of “misleading advertisements,” but it boils down to a simple Truth in Advertising statement; “When consumers see or hear an advertisement, whether it’s on the Internet, radio or television, or anywhere else, federal law says that ad must be truthful, not misleading.” The FTC had made a number of guides explaining how truth in advertising works in different situations, but fake testimonials are actually illegal under Section 5 of the FTC Act (15 U.S.C. 45).
Fake testimonials are considered false or deceptive advertising—and therefore against the law—for several reasons. First, they are not based on a real customer’s experience, which a testimonial must be. Second, it misleads the customer. Claiming a happy customer exists when the don’t is misleading in itself, but whatever the fake testimonial claims is also misleading. Third, it encourages customers to spend money on a product or service they otherwise might not, thereby financially defrauding the customer, which is an especially notable offense for the FTC.
How Do I Get My First Testimonials?
Many businesses use fake testimonials when they don’t have any of their own, often when they’re new. This is a crime, it’s deceptive to customers, unfair to competitors, exposes you to liability, and it’s bad for your reputation. So what can you do instead?
A System to Get Your First Testimonials
Get the free testimonial request toolkit
- If you have a new product, try getting your first testimonials before you launch. Talk to your first product testers. These people helped you make the product great, and their input can help convince other customers too. Since you’re giving these people the product for free, make sure you disclose this.
- If you have a new business, get your first testimonials with your grand opening event. Set up a kiosk, hand out surveys, conduct a contest or giveaway, or simply ask your first visitors to share their experience. A testimonial collection tool like Boast makes it easy to capture testimonials at your grand opening using a laptop computer, tablet, or smartphone.
- If you’re combating bad testimonials or reviews, show that you have fixed the problem and demonstrate it. If you have a business, hold a celebratory event and capture testimonials there. If you sell a product, give away some free samples, but make sure you’re following the rules of honest testimonials. Appeal to your existing customers in an email or social media campaign.
- Remember that not all bad testimonials are bad news. Companies with 100% glowing reviews make customers suspicious. A few critical comments will show that you are not using fake testimonials or deceptive advertising.
Are Paid Testimonials Illegal?
Yes, with some exceptions.
Many of the same laws which make fake testimonials illegal also make paid testimonials illegal. There are some differences, however, since paid testimonials can be based on real customer experiences.
The FTC’s “Guides Concerning the Use of Testimonials and Endorsements in Advertising” address how 15 U.S.C. 45 applies to testimonials, including paid testimonials. These guides and others lay out legal (and illegal) practices for testimonials or reviews on sites like Yelp, TripAdvisor, Google Business Reviews and others, as well as any testimonials you use in advertisements, on your website or elsewhere.
According to these guides, legal testimonials must adhere to all of the following;
- Made by a real customer or user of the product or service
- Based on a real user’s experience
- Be an accurate description of expected or normal results
- Not influenced by money, gifts, or publicity unless it is clearly disclosed
- Not influenced by a familiar or business relationship (such as employer-employee)
- Not edited or altered so to change the message
This means paid testimonials are illegal unless; the company or person giving the testimonials clearly states they are being paid and the statement is still true and accurate. The FTC also makes it clear that gifts such as a free trial of the product or service, a gift card, a giveaway, or any other incentive is a “material relationship” that must be disclosed.
While the FTC makes some exceptions for true testimonials that disclose payment, many review sites take a harder stance against this practice. Amazon, for example, does not allow any type of paid reviews. Both the business and the reviewer can be banned from the site for taking part. Google, Yelp, TripAdvisor and others all have strict “no paid testimonials allowed” policies. This includes free products and discounts as well!
How Do I Get Customers to Leave Reviews?
Getting a customer to take time out of their day to leave a review can be tough. Customers have a lot of demands on their time, so how can you compete without an payment?
- Go above and beyond. If you truly deliver an exceptional customer service experience and then ask for a testimonial, many customers will oblige.
- Forge a relationship. Find out what your customers care about and give it to them. Are they looking for a company with good ethics? Someone with knowledgeable experts? Personal service? Delightful ambiance? The customers that repeatedly buy, visit, or work with you for a long time are the customers that support you and will give testimonials.
- Make it easy. Make your customers as comfortable as possible giving reviews. Provide question prompts so they don’t have to search for something to say. Allow them to share a testimonial with just a few clicks.
- Ask at the right time. When a customer comes in for an appointment or a regular visit, ask if they have a minute to share their thoughts. Or, if an online purchase was completed, ask for a testimonials when you ask how their experience was.
- Be sincere. While paid and fake testimonials rely on deception, real testimonials allow you to just be yourself. Tell the customer what you think of your relationship and why their public approval is important to you.
- Have a system and a plan. Testimonials don’t just happen, you have to ask for them. Have a plan and system for gathering and managing testimonials, such as an automated email campaign, an in-person script, or a video app like Boast.
How Illegal Are Paid or Fake Testimonials?
So paid and fake testimonials are against the law, but just how illegal are they? What’s the punishment?
Thousands or millions of dollars in penalties and civil suits.
Each FTC violation is subject to a $10,000 penalty under 15 U.S.C. 45. And it doesn’t stop there; there’s also a fine of $41,484 each day a deceptive ad runs. For many big corporations, this might not be enough to stop paid or fake testimonials. The FTC can and has filed civil actions against larger businesses with judgements in the millions of dollars. The more widespread, deliberate, misleading or damaging a deceptive ad is, the bigger the civil case will be. The FTC can also order businesses to admit to and correct deception, or return money to consumers they deceived. In 2016, Volkswagen had to pay out $10 billion from a false advertising campaign. Though this was due to false product claims and not fake testimonials, it’s a severe demonstration of the litigating power of the Commission.
Besides being against the law, businesses who host reviews and testimonials are also fed up. They’ve changed their terms of service agreements to stop incentivized reviews altogether, and they’ll remove or flag reviewers or businesses who violate the agreements. Amazon sued over 1,000 offending businesses, reviewers and sites in 2015. Yelp did the same, bringing offending companies and reviewers to court for fraud.
Will I Get Caught?
Paid and fake testimonials are illegal, and they can carry harsh penalties. But some business owners still ask; will I get caught?
Most likely, yes.
The FTC’s blog is filled with hundreds of cases they’ve brought against small and large businesses. Big businesses like Volkswagen, small B2C trampoline sellers, B2B freight brokers, marketing companies and many more have all been caught using paid reviews or fake testimonials to deceive consumers, and they’ve paid thousands, even millions of dollars. And there are likely many other cases that don’t make it to the blog.
Many of these cases are first brought to the FTC’s attention by suspicious or angry customers, competitors, third-party websites, consumer protection groups, or local governments. Regional FTC offices and investigators address complaints, and sometimes work with local law enforcement or district attorneys to stop deceptive practices on a local level. Third-party sites simply follow users’ trails to track down fraudsters and file civil suits against them, or create an automated screening process to prevent fake testimonials.
Customers have also taken notice of paid and fake reviews. Several plugins and apps now exist that will point out fake reviews as customers shop online. These plugins take note of generic terms, grammar mistakes or other common red flags that aren’t present in real, trustworthy reviews.
In essence, if it’s making a difference in customers’ minds, the FTC, other websites, or other customers will notice. And if it’s not making a difference, is it worth putting your reputation on the line for?
Before you start asking if paid or fake testimonials are legal, ask yourself if it’s worth it. There are plenty of ways to get real, honest testimonials and win real customer approval without sacrificing your reputation.