The U.S. Federal Trade Commission has brought first-ever fraud charges against a company accused of commissioning a company to write fake reviews on Amazon.
The charges are against Cure Encapsulations, Inc. and its owner, Naftula Jacobowitz, for making false claims about its weight-loss supplement and paying a website to create fake Amazon reviews to pump up the product. The FTC alleges that Cure Encapsulations paid amazonverifiedreviews.com to make sure the product stayed above 4.3 stars out of five on Amazon.
“People rely on reviews when they’re shopping online,” Andrew Smith, director of the FTC’s Bureau of Consumer Protection, said in a statement. “When a company buys fake reviews to inflate its Amazon ratings, it hurts both shoppers and companies that play by the rules.”
A proposed court order settling the FTC’s complaint would bar Cure Encapsulations from “making weight-loss, appetite-suppression, fat-blocking, or disease-treatment claims for any dietary supplement, food, or drug unless they have competent and reliable scientific evidence in the form of human clinical testing supporting the claims.”
Amazon issued the following statement in response to the FTC’s charges:
“We welcome the FTC’s work in this area. Amazon invests significant resources to protect the integrity of reviews in our store because we know customers value the insights and experiences shared by fellow shoppers. Even one inauthentic review is one too many. We have clear participation guidelines for both reviewers and selling partners and we suspend, ban, and take legal action on those who violate our policies.”
Cure Encapsulations’ weight loss supplement uses the plant garcinia cambogia, which is native to Indonesia. Though some see the plant as a contributor to weight loss, research has associated it with acute liver failure.
The order imposes a fine of $12.8 million on Cure Encapsulations, though it would be suspended if the company pays $50,000 to the FTC and settles unpaid income taxes. However, the FTC said it reserves the right to demand full payment of the fine should it find the company wasn’t honest about its financial conditions.
Amazon has aggressively fought fake reviews on its platform for years. It has banned most reviews done in exchange for free and discounted items and it has sued numerous groups it believes authored fake reviews.