The FTC has successfully brought the first-ever case against a supplement company that allegedly boosted its Amazon ratings through a third-party firm that crafts fake “verified” reviews.
According to the settlement, Cure Encapsulations sold a supplement on Amazon touted as an “appetite-suppressing, fat-blocking, weight-loss pill.”
One of the ingredients in the supplement is an Indonesian plant called garcinia cambogia that has been linked to acute liver failure.
“People rely on reviews when they’re shopping online. When a company buys fake reviews to inflate its Amazon ratings, it hurts both shoppers and companies that play by the rules,” said Andrew Smith, director of the FTC’s Bureau of Consumer Protection, in a statement.
The FTC claims the company’s founder turned to amazonverifiedreviews.com — one of the hundreds of websites that writes fake five-star reviews for a fee.
Cure Encapsulations must now inform Amazon that it paid for reviews and must notify all customers who purchased the so-called weight-loss supplement.
The FTC is imposing a $12.8-million fine, with only $50,000 due and the remainder used as a way to enforce the judgement.
WATCH: Tips from a marketing expert about how to spot fake reviews
Research shows that 91 per cent of consumers rely on online reviews for their purchases, and it takes about 10 reviews before a consumer can start trusting a business or product.
But a lot of those reviews are unreliable, and experts say it can put consumers at risk.
Fakespot, a website that identifies fake reviews, estimates 30 per cent of product reviews on Amazon are inauthentic.
Recognizing this is a widespread problem, Amazon has taken the matter into its own hands. As an Amazon spokesperson told TechCrunch, the company has filed suits against more than 1,000 defendants for “review abuse” since 2015. They’ve also sued the third-party sites that write them.