FTC Settles With Company Allegedly Posting Bogus Reviews

The Federal Trade Commission said this week that it had settled charges with marketing company Reverb Communications, which allegedly posted shill iTunes reviews of a client who develops gaming apps.

Reverb agreed that in the future it will disclose all connections between itself and its clients. The company didn't admit wrongdoing as part of the settlement. Owner Tracie Snitker said that the company only resolved the case to avoid "continuing to spend time and money arguing, and laying off employees to fight what we believed was a frivolous matter."

The FTC alleged in its complaint that Reverb employees raved about company clients on iTunes, by posting four and five-star reviews with commentary like "Amazing new game," and "One of the best apps just got better."

The settlement is significant because it marks the first time the FTC has drawn on its new guides to testimonials and endorsements in an enforcement action. That document, released last year, says that material connections between marketers and endorsers must be disclosed.

While it doesn't seem likely that many people will take issue with the FTC's stance in this instance -- that is, with the idea that professional marketers shouldn't pose as unbiased consumers online -- other portions of the FTC's guides remain more controversial. That's because the FTC also says that bloggers, citizen journalists and other consumers who post online should disclose any freebies they receive from marketers, including review copies -- even when people who work for mainstream media would not make similar disclosures.

The FTC has yet to come up with a good reason to justify why gifts to bloggers should be treated differently than gifts to writers for mainstream media outlets. Nonetheless, the commission already indicated that it intends to take action against marketers who provide free samples to consumers without also telling them to disclose the receipt of that merchandise.

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