American IT peripheral brand Belkin made public apologies when it came out that an employee had put ads online offering a fee for “independent” Belkin product reviews to be sent to Amazon. Stephen Groom asks whether such a practice in the UK would breach ad laws or codes.
Topic: Online advertising
When: January 2009
Law stated as at: 31 March 2009
The US-based "Daily Background" website revealed a promotional practice involving IT peripherals manufacturer Belkin which gave Belkin cause to issue a public apology.
The practice came to light when the "Daily Background" spotted an electronic "small ad" posted by one Michael Bayard on Amazon's "Mechanical Turk" service. The ad sought people to write positive reviews of a Belkin wireless hub so these would appear amongst the product reviews that popped up on …Amazon.
No need to own product before reviewing
Positive reviews would be paid for at 65cents each, the ad said, with no experience required and no need even to own the product being reviewed.
The inquisitive Daily Background checked out Mr. Bayard's profile on Linkedin. This indicated that he was business development director of….Belkin.
When news of this came out, Belkin swiftly apologised and made it clear that none of their channel partners such as Amazon were aware of this. They stated that immediate steps were being taken to take down any tainted postings and said this was an isolated incident involving a particular employee and was not company policy.
Whether the one and half star rating on Amazon for the Belkin product in question was before or after the rogue reviews' removal is unclear.
Why this matters:
Clearly Belkin will have to work hard to renew customer trust and the case inevitably puts in play the whole question of just how much faith consumers should place in online reviews before making what in many cases could be a major purchase decision.
A number of questions arise:
- Who is it exactly who takes the time and trouble to post online product/service reviews
- Are these reviews unsolicited?
- Are they paid for?
- Who decides on the star rating that can so often be the clinching factor in the purchase decision process?
- Is the Belkin case the tip of the iceberg or an isolated instance of an employee on a frolic of his own?
- Would the practice breach any UK law or Code if it happened here?
CAP Code does not apply, for now
From a code point of view, there is no issue so far as the ASA-enforced CAP Code is concerned.
This is because, as things stand at present, the CAP Code simply does not apply to such online content.
The Code states that it will not apply to "website content, except sales promotions and advertisements in paid-for space." This is ambiguous. Do the sales promotions have to be in paid-for space to be covered or only the advertisements? Whatever the answer on this, product reviews posted on ecommerce websites look to be outside remit, provided they do not feature in banners ads or other paid-for space.
We say "as things stand at present" because an announcement is expected very soon from the Committee of Advertising Practice, the sister body to the Advertising Standards Authority that writes the CAP and (broadcast advertising) BCAP Codes.
This is expected to extend the CAP Code's online remit and may conceivably cover this type of content.
Unfair trading regulations?
There is potentially more help for consumers and more risk for businesses from the Consumer Protection from Unfair Trading Regulations 2008 ("CPUTRegs").
These apply to any "course of conduct, representation or commercial communication…by a trader which is directly connected with the promotion, sale or supply of a product to or from consumers."
No exclusion of online activity here and the very broad "course of conduct" and "connected with ..sale" wording should engage the CPUTRegs in our scenario, but under which limb of the Regs would this activity fall?
First there is "always unfair" commercial practice #22 in Schedule 1:
"falsely claiming or creating the impression that the trader is not acting for purposes relating to his trade, business, craft or profession, or falsely representing oneself as a consumer."
But would this apply?
The reviews may be paid for by the trader, but it seems pretty clear that the trader is not writing them or submitting them for posting on for example Amazon, so this would seem to let the brand owner off the hook on this count.
It seems more likely that the offender here would be the review author. After all, they are in context arguably not a "consumer" at all, but a paid for, covert spokesperson for the brand owner. But a prosecution against an individual may be seen by regulators as unattractive and this would not get to the root of the problem.
Misleading editorial content?
Then there is unfair commercial practice #11 in Schedule 1 to the CPUT Regs:
"using editorial content in the media to promote a product where a trader has paid for the promotion without making that clear in the content…"
Again there seems to be room for argument that reviews a la Belkin would not necessarily fall within this. After all, Balkin is not paying Amazon to carry the review, but paying the review author and query when the review is clearly not written by Amazon, is it "testimonial" rather than "editorial"?
Also this practice is one of the two in Schedule 1 that are specifically stated not to be criminal offences, so the exposure of the trader would be more to OFT or trading standards seeking, for instance, a form of "Stop now" order under the Enterprise Act 2003. Maybe not a threat that some traders would take as seriously as they should.
But there may still be criminal exposure for the brand owner under other parts of the CPUTRegs.
The omission to state that the review has been paid for might well be a "misleading omission" under Reg 6. Omitting "material information" falls within this and "material information" is stated at Reg 6 (3) to mean "the information which the average consumer needs, according to the context, to take an informed transactional decision."
The paid-for nature of the review would arguably be exactly such information, but could the brand owner defend successfully on the basis that the review, with or without omissions, has come from a third party so the omitting is the fault of the reviewer, not the brand owner? Maybe.
Separately there could be a "misleading action" here which is contrary to the CPUTRegs.
Regs 5 2 (a), 5 4 (j) and 5 6 (f) criminalise a commercial practice whose "overall presentation in any way deceives or is likely to deceive the average consumer in relation to the trader's "affiliations or connections."
Could there be arguments, meretricious or otherwise, that the reviews are from the "consumer" not the trader. As such, the submission might run, they might be misleading as to the consumer's affiliations or connections, but cannot by definition be misleading as to the affiliations or connections of the trader.
Could these or any other of the defensive gambits suggested above make life seriously difficult for a CPUTRegs enforcer prosecuting a reviewer-bribing brand owner? The writer couldn't possibly comment but the bottom line is that it would not necessarily be plain sailing. Disappointing perhaps given the great claims made for these new regulations before their coming into force in May 2008.
A fraudulent misrepresentation would give grounds for rescission of the purchase contract and return in full of the purchase monies, but under UK law the general rule is that mere silence will not amount to a misrepresentation and in any event the reviewer is making the statement which is silent on the key issue, not the entity entering into the contract of sale.
So in conclusion, it seems that, obviously unpalatable though this practice is, it is by no means clear cut that it breaches any existing UK law or code. Perhaps the much vaunted and up and coming amended CAP Code, extending potentially to online practices such as this, offers the best hope. Watch this space.