Reverb Strikes FTC Deal Over Bogus iTunes Reviews

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Reverb Communications, the marketing company accused of posting staged App Store reviews designed to boost their client’s app ratings, has agreed to a deal in a Federal Trade Commission investigation into its practices. The federal agency had been looking into complaints that Reverb employees had been posting positive app reviews without disclosing their relationship with their clients.

As part of the deal with the FTC, Reverb agreed to pull all of the reviews it posted to stack its clients App Store ratings, and also agreed to include proper disclosure in its client promotional efforts, according to the New York Times. The company isn’t, however, being hit with any fines or penalties.

“It became apparent that we would never agree on the facts of the situation,” said company executive Tracie Snitker. “Rather than continuing to spend time and money arguing, and laying off employees to fight what we believed was a frivolous matter, we settled this case and ended the discussion.”

Reverb Communications never admitted to any wrongdoing in the investigation, either.

The Reverb investigation has the distinction of being the first case where the FTC enforced new Internet regulations that require full disclosure for product endorsements. When the new rules were introduced last year, there was confusion over who would be required to comply with the changes.

“This case sort of shows that what [FTC regulators] have in mind is not the individual blogger or Twitterer, but rather a professional endorser,” said Harvard Law School Professor Jonathan Zittrain.

For its part, the FTC is hoping the Reverb case will help show other companies gaming product ratings with fake reviews won’t fly. Stacey Ferguson, an FTC advertising practices division attorney, commented “We hope that this case will show advertisers that they have to be transparent in their practices and help guide other ad agencies.”

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Comments

geoduck

Astroturfing has been around for years. It’s unethical but the FTC has never gone after anyone before. Could someone explain why now? What’s changed? What was Reverb doing that others didn’t?

Reverb

Reverb Statement:
During discussions with the FTC, it became apparent that we would never agree on the facts of the situation. Rather than continuing to spend time and money arguing, and laying off employees to fight what we believed was a frivolous matter, we settled this case and ended the discussion because as the FTC states: ‘The consent agreement is for settlement purposes only and does not constitute admission by the respondents of a law violation.’

This issue was specific to a handful of small, independently developed iPhone apps that several team members downloaded onto their personal iPhones in their own time using their own money and accounts, a right and privilege afforded to every iPhone and iTouch user. Any iTunes user will understand that each time a product is purchased you are allowed to post one comment per product. Seven out of our 16 employees purchased games which Reverb had been working on and to this the FTC dedicated an investigation. These posts were neither mandated by Reverb nor connected to our policies. Bottom line, these allegations are old, this situation was settled awhile ago and had nothing to do with the clients that many outlets have been reporting. The FTC has continuously made statements that the reviews are ?fake reviews? something we question; if a person plays the game and posts one review based on their own opinion about the game should that be constituted as ?fake?? The FTC should evaluate if personal posts by these employees justifies this type of time, money and investigation. It?s become apparent to Reverb that this disagreement with the FTC is being used to communicate their new posting policy. We stand by the statement from the FTC that: ‘The consent agreement is for settlement purposes only and does not constitute admission by the respondents of a law violation.’

Ross Edwards

Reverb is just the first of many who will have their rights violated by the new FTC rules.  In effect since 12/1/09, these new rules sharply infringe basic freedom of speech and of the press for bloggers and anyone else posting online opinions.  Of course, there was no outcry over this among most of the public because it didn’t prevent them from being able to watch the latest American Idol.

Blogger Ari Armstrong wrote at the time in response to the new rules:
“[T]he FTC has no legitimate authority to issue such rules, which defy the First Amendment and constitute censorship and the chilling of free speech. The rules are extremely broad, ranging from free review copies of books to Twitter posts. The rules are arbitrary and ambiguous, such that their precise requirements and penalties cannot be determined in advance. The rules thus open the door to political abuses. The rules are discriminatory in that they subject bloggers to different standards than print journalists.”

And thanks to that arbitrary, ambiguous, naked exercise of executive power, you have a situation like what the FTC has done to Reverb in this instance.

Disclosure: I have no connection whatsoever to Reverb.  In fact, until today I didn’t even know they existed.  I have no connection to Ari Armstrong except that I am a regular reader of his blog.  And I’m not in the software business.

Intruder

Did any of them post anything but glowing reviews of the apps that were downloaded?

Ross Edwards

Couldn’t tell you.  I haven’t seen the reviews in question because I’m still with Blackberry and not iPhone yet.

But does it matter?  Their reviews could say that the apps are the best thing since unicorn tears, and it would still be up to the reader to weigh the credibility of the comment and make their own buying decision.  Everyone knows that people give, on average, slightly better reviews to things they’ve bought (to reinforce their buying decision and deflect buyer’s remorse).  So it’s not like the audience is a bunch of automatons who instantly fork over money upon encountering any positive review.

Plus, with the “one review per buyer” limit, it’s not like the company could turn loose a horde of astroturfers to promote the software.

Intruder

I believe the point is that the reader can’t weigh the credibility of the comment if they don’t know that the commenter has a vested interest in the success of the app.

Ross Edwards

And if you read my second paragraph in my previous post, you would see that it doesn’t matter.  You can assume that ANY good review on ANY app is by someone with a vested interest, whether they are a buyer who simply wants to feel good about the purchase they made, or someone whose interest goes further than that.  There are NO app reviews written by completely detached individuals who don’t have a dog in the hunt.  Even a bad review is going to come from someone with an axe to grind, not random guy on the street.  Heck, I’d expect to see negative reviews from individuals associated with an app’s competing publishers.

It is up to the buyer to consider what a review says and then decide if it is worth following.  For example, does the review say “The app lets you do X” or does it say “The app is awesome”?  The former gives me something to base a decision off; the latter offers nothing.

computerbandgeek

It still amazes me that Apple hasn’t done more to stop these spammers. I give ZERO credence to 5star and 1star app reviews on the appstore because either there are ~10billion braindead people in the world, or there are a lot of companies that sell services stacking appstore reviews. I suspect the latter.

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