FTC cracks down on fake Amazon reviews in landmark case

The weight-loss capsule seller now has to tell Amazon about every fake review it paid for.

The Federal Trade Commission (FTC) has resolved its first ever case over paid fake reviews on a retail website. In the agency's complaint, it accused Amazon seller Cure Encapsulations Inc. and its owner Naftula Jacobowitz of paying to write and post fake feedback for its weight-loss product. Further, the FTC accused the company of making unsubstantiated claims for the garcinia cambogia weight-loss supplements it used to sell.

According to the commission, Jacobowitz told the fake review provider that his product listed as "Quality Encapsulations Garcinia Cambogia Extract with HCA" needs to have an average rating of 4.3 out of 5 stars to sell. "Please make my product... stay a five star," he allegedly said in his communication with the website. The FTC charged the defendants for making it appear as if the reviews, which enabled the product to maintain a 5-star rating, are legit when they're actually fabricated.

Amazon provided Engadget with the following statement:

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.

Amazon has been grappling with a massive fake review problem for quite a while now. It has filed lawsuits against numerous fake review websites and thousands of individual providers on Fiverr over the years. It sued, in particular, back in 2016. Andrew Smith, the Director of 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."

The commission has slapped the defendants with a $12.8 million fine. It will be suspended upon a $50,000 payment to the FTC but will have to be paid in full if the company violates the settlement's terms. Jacobowitz and his company are now obligated to tell previous buyers that the FTC questioned its product's efficacy claims. The garcinia cambogia supplement's listing used to market it as a "powerful appetite suppressant" that "literally blocks fat from forming" -- claims the company can no longer make unless it provides reliable scientific evidence. In addition, the defendants have to identify and tell Amazon about every fake review it paid for.

Update, 2/27/19, 12:45PM ET: Updated to include Amazon's statement.