FTC V. THE BOUNTIFUL COMPANY: LESSONS IN REVIEW HIJACKING
In the world of healthy foods and supplements, The Bountiful Company just discovered the hard truth: the FTC has found its teeth, and any practices you thought were safe are about to get a lot more complicated.
It’s common for brand owners in our space to narrowly perceive FTC regulations as pertaining solely to the words directly used on things explicitly labeled as “marketing materials”. However, this perspective overlooks the intricate web of marketing components that have become integral to modern promotional strategies - or to put it bluntly: this is an outdated mindset.
While you could get by with such a narrow view of what is and isn’t legally contentious in the eyes of the FTC, 10 or 20 years ago, the wild west of the Internet has changed things.
More specifically?
The way in which online marketing materials are not as easy to define as the print marketing materials often are. For instance, user reviews will inevitably play a large role in converting a prospect into a customer, many business owners don’t specifically think of user reviews as actual marketing material and certainly never consider that the FTC actually could.
Indirect Marketing Ecosystems
With the proliferation of digital platforms and marketing tactics, including the significant influence of user-generated content like reviews, the regulatory landscape has expanded far beyond traditional advertising copy. Today, the FTC's purview extends to encompass a wide array of marketing practices, necessitating a comprehensive understanding of compliance across various channels.
User-generated content (UGC), particularly reviews, has emerged as a cornerstone of consumer decision-making in the health and supplements sector. As consumers increasingly rely on peer feedback to inform their purchasing choices, the influence of these reviews on brand perception and sales cannot be overstated.
Consequently, the FTC is paying closer attention to the authenticity and transparency of user reviews than ever before. This heightened scrutiny underscores the importance of ethical marketing practices and compliance with FTC guidelines, as even seemingly innocuous deviations from regulatory standards can lead to severe consequences for businesses. In this increasingly complex and interconnected marketing landscape, navigating the legal terrain requires vigilance, foresight, and a commitment to transparency to safeguard your business's reputation and longevity.
What Is Review Hijacking?
"Review hijacking" is a deceptive tactic employed by some businesses to artificially boost the ratings and reviews of their products. In this practice, companies manipulate online platforms, such as Amazon, by creating variation relationships between their new products and highly-rated ones.
By doing so, they can "borrow" the positive ratings, reviews, and badges from well-established products, thereby misleading consumers about the quality and popularity of their own offerings.
Bringing things back to The Bountiful Company, they drifted into the realm of review hijacking by strategically associating their new supplements with other of their own top-selling products on Amazon, even when they had radically different formulations and should not have been allowed to do so. This allowed them to showcase inflated ratings, reviews, and badges on their product pages.
Specifically, In March 2020, they introduced two new products on Amazon's platform: Nature’s Bounty Stress Comfort Mood Booster and Nature’s Bounty Stress Comfort Peace of Mind Stress Relief Gummies. Seeking to boost the visibility of these new offerings, Bountiful requested that Amazon combine them in a "variation relationship" with three of their established products.
However, a significant issue arose as these products had differing formulations. Internal correspondence from a Bountiful employee revealed that despite consumers' lukewarm reception to the new products, sales experienced a notable increase when they were associated with the three more successful and higher-rated items. Another email from within the company detailed the strategy of creating variation relationships between new and established products to "borrow" the positive attributes, such as best-selling flags, ratings, reviews, and first-page placement, from the top sellers. This approach was described as "extremely successful" in launching new products.
The alleged "review hijacking" undertaken by Bountiful resulted in misleading attributions of reviews, ratings, and badges to newer or less popular products. This deceptive maneuver created a false impression of their products' popularity and consumer satisfaction, ultimately undermining trust in their brand and leading to legal consequences.
Legal Consequences
As a result, the FTC filed a complaint against The Bountiful Company, marking the agency's first enforcement action challenging this specific practice.
The legal ramifications were substantial, culminating in the approval of a final consent order by the FTC.
A final consent order is a legal agreement between the Federal Trade Commission (FTC) and a company or individual accused of violating consumer protection laws. It typically represents a settlement reached between the FTC and the accused party, whereby the accused agrees to certain terms and conditions without admitting or denying guilt. The final consent order outlines specific actions that the accused must take to remedy the violations and prevent future infractions. These actions often include monetary penalties, consumer refunds, and injunctions against engaging in deceptive or unfair practices in the future.
Once approved by the FTC commissioners, a final consent order becomes legally binding and enforceable. In this case, the final consent order required The Bountiful Company to pay a monetary relief of $600,000 to affected consumers and imposed strict prohibitions on similar deceptive practices in the future.
Beyond financial penalties, the company's reputation suffered significant damage, eroding consumer trust and potentially leading to long-term consequences for their brand. As we’ve discussed previously, brands in the healthy food and supplements verticals need to be particularly careful with the FTC, as the indirect consequences of being targeted by the FTC are uniquely destructive, typically far more so than the direct financial penalties.
What Can We Learn?
By strategically associating their new supplements with top-selling products on Amazon, The Bountiful Company showcased inflated ratings, reviews, and badges on their product pages. This maneuver created a false impression of their products' popularity and consumer satisfaction, ultimately eroding trust in their brand and leading to legal consequences.
So, what lessons can health food and supplements businesses learn from The Bountiful Company's misstep?
Transparency is Non-Negotiable: Honesty and transparency should be the guiding principles of every business. Misleading consumers through deceptive tactics like review hijacking not only damages trust but can also have legal repercussions.
Compliance with Regulations: Adherence to regulations, such as those set forth by the Federal Trade Commission (FTC), is essential. Violating consumer protection laws can result in hefty fines and tarnish a company's reputation irreparably.
Focus on Genuine Engagement: Instead of resorting to deceptive tactics, businesses should focus on fostering genuine engagement with consumers. Building a loyal customer base through quality products and excellent customer service is far more sustainable in the long run.
Prioritize Consumer Trust: Trust is the foundation of any successful business. Protecting and nurturing consumer trust should be a top priority, as it directly impacts brand reputation and loyalty.
In conclusion, the case of The Bountiful Company serves as a cautionary tale for businesses in the health food and supplements industry. By learning from their mistakes and embracing ethical practices, businesses can not only avoid legal trouble but also build lasting relationships with their customers based on trust and integrity.
Looking for advisement on FTC compliance for your health food or supplement business? Book a free consultation with our team today!
