On March 16, 2022, Meta Platforms, Inc. (previously known as “Facebook”) filed a lawsuit in the Northern District of California against Chad Taylor Cowan (the owner of Customer Feedback Score Solutions) for allegedly providing fake Facebook engagement services. This case is part of Facebook’s ongoing efforts to remove and deter fake engagement and advertising from appearing on its platform. For those businesses that want to engage in Facebook marketing, please be aware of the fact that you must comply both with relevant marketing laws AND Facebook’s platform policies.
False Reviews Violate Facebook’s Marketing Policies
Meta alleges that Cowan breached Facebook’s Terms, Advertising, and Page Policies by providing his customers with Facebook accounts that posted fake reviews for purposes of increasing businesses’ customer engagement. The Meta complaint explains that such accounts would flood the Facebook platform with positive reviews for a fee, which resulted in artificially increasing such businesses’ Customer Feedback Scores. Meta claimed that these increased scores helped businesses circumvent the platform’s misleading advertisement detection and enforcement mechanisms. Meta is seeking damages and injunctive relief for Cowan’s violations of its Terms and Policies.
FTC and Fake Reviews
In addition to Meta’s ongoing efforts, the Federal Trade Commission (the “FTC”) has been actively working to deter and punish businesses that publish misleading and false reviews or endorsements. The FTC recently updated its Guides Concerning the Use of Endorsements and Testimonials in Advertising, making clear that fake testimonials are strictly prohibited. Following these updates, the FTC sent notices of violation to over 700 businesses, warning that they had engaged in a number of misleading endorsement practices (including the posting of fake reviews) and will face serious civil penalties for any future violations.
These civil penalties include fines of up to $43,792 per offense if violators are determined to have willfully acted in violation of the Federal Trade Commission Act. Please note that the FTC has levied multi-million dollar judgments against companies that have engaged in the practice of fake reviews.
Why Does This Matter for Your Business?
To avoid such lawsuits and penalties, businesses must understand the online platform policies and laws that apply to their advertising practices (including their Facebook marketing campaigns). The Meta lawsuit against Cowan is another example of how businesses that engage in deceptive and misleading advertising practices may be subject to civil lawsuits (such as claims brought by online platforms for Terms of Service violations), in addition to regulatory actions.
The material contained herein is provided for information purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.
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