Giving Away Product to Get a Good Review Violates FTC Influencer Rules

(April 8, 2019) If you want to expand your business by giving away product and asking customers to post favorable reviews, don’t follow the UrthBox, Inc. marketing plan, or you will pay a hefty fine to the Federal Trade Commission (“FTC”).

UrthBox sells snack products via the web. Starting in 2016, the company offered a “free trial” of its snack boxes. When customers went online to accept the offer, the customers were told they had to pay shipping and handling to get the product. On the checkout page, the customers had to supply their names, shipping address, billing address, credit card information, and account information. They then had to click a big green “CONTINUE” button, the FTC said. The button automatically enrolled the customers in a six-month subscription of the snack box, a fact that was not disclosed on the page. The only way to avoid the automatic charge for the full subscription was to notify UrthBox before the first month following the shipment of the free box.

In many cases when disgruntled customers contacted UrthBox to cancel the subscription, they and others were offered another free snack box if they posted a positive review of the snack boxes on the Better Business Bureau (“BBB”) website and sent UrthBox a screenshot of the positive review. The customers did not disclose on the BBB site that they had been offered a free snack box in return for their positive customer review.

According to the FTC complaint, after UrthBox began the incentive program, the company’s reviews grew from just 9 reviews in 2016, all negative, to 695 reviews in 2017. “Of these 695 customer reviews posted in 2017, 612 were positive, 15 were neutral, and 68 were negative. . . A vast majority of the customer reviews that resulted in this growth were submitted pursuant to” the company’s incentive program.

UrthBox also offered free snack boxes to customers for positive postings on TrustPilot.com, which  appeared to be “independent comments reflecting the opinions and experiences of ordinary consumers.”

Additionally, UrthBox offered customers store credit and/or fee snack boxes in exchange for posting about their snack boxes on their personal social media accounts, including Twitter, Instagram, Tumblr, and Facebook without disclosing what they were promised by UrthBox for their posts.

The FTC charged that UrthBox’s actions in automatically enrolling customers in a six-month subscription without proper disclosure and representing that positive customer reviews of the produce were independent opinions or experiences of ordinary impartial customers were false and misleading. To settle the case, UrthBox agreed to pay a fine of $100,000.

If you supply a product, payment, or other item of value to an individual for posting comments on the internet or social media, the activity may fall under the FTC endorsement and testimonial rules. The rules require that such payments be disclosed conspicuously with the endorsement. A copy of the FTC guides is available online or by clicking here.

In the Matter of UrthBox, Inc., FTC No. 172-3028, issued April 3, 2019.