Are paid customer reviews legal? Do paid reviews violate BBB policy?

Contributed by Dick Kelly, Senior Regulatory Affairs Advisor, International Association of Better Business Bureaus, Inc.

Are paid customer reviews legal under the FTC Act, and, if legal, do they violate BBB policy? The short answer is that the FTC does not prohibit the posting of such reviews if there is a conspicuous disclosure of the incentive. BBB’s Customer Review Acceptance Policy goes beyond FTC’s legal requirements and prohibits customer reviews that are incentivized even if a disclosure is made. Further, BBB policy states that an Accredited Business offering such paid incentives, disclosed or not, violates BBB’s Code of Business Practice.  

Outside of BBB, the FTC does not prohibit the posting of paid customer reviews if there is a clear and conspicuous disclosure that they have been incentivized.

Three Questions Under FTC law and policy:  

Are Paid Customer Reviews legal? YES, if there is a clear and conspicuous disclosure (not in fine print, buried amidst other information, but in close proximately or built into the actual review) of the incentive and the comments in the review are truthful and supported.
Canadian law appears to adopt a similar policy: “… problems arise with what appear to be third party testimonials when there is an undisclosed material connection, financial or otherwise, between the third-party and the advertiser, such as an employee. These material connections are relevant, even if the person provides an honest and unbiased review, because consumers highly value the independence of third-party opinions."

Are Incentives for Customer Reviews legal in the U.S.? IT DEPENDS. If the incentive is simply offered to encourage a customer to post a review, the use of incentives is OK if prominently disclosed. If intended to get the customer to post positive comments that are not really their own, then no.

Are Paid Customers Reviews legal on Third-Party Websites? Same answers. Under FTC standards, businesses need to remind customers posting incentivized reviews to include a conspicuous disclosure.

DISCUSSION: The Federal Trade Commission (FTC) Act prohibits unfair or deceptive practices. The FTC has made clear in its guides on endorsements and testimonials and through individual cases that using incentives such as a payment or a gift to encourage the posting of a customer review on the business’s website is a deceptive practice, unless that connection is clearly disclosed with that posting. Moreover, giving a monetary incentive or gift to encourage a positive review may also be deceptive, even with a disclosure if it led the reviewer to change the review from negative to positive.  

In October of 2021,  the FTC sent out 700+ notice letters to a wide range of advertisers and advertising agencies that reminded these companies of this requirement, noting that “It is an unfair or deceptive trade practice to fail to disclose a connection between an endorser and the seller of an advertised product or service, if such a connection might materially affect the weight or credibility of the endorsement and if the connection would not be reasonably expected by consumers. In a help for businesses on complying with this standard, the FTC says: “if an ad features an endorser who’s a relative or employee of the marketer, the ad is misleading unless the connection is made clear. The same is usually true if the endorser has been paid or given something of value to tout the product. The reason is obvious: Knowing about the connection is important information for anyone evaluating the endorsement.” 

Like the FTC, National Advertising Division (“NAD”) of BBB National Programs decisions states that an advertiser should provide a clear and conspicuous disclosure whenever a review posted on its website was incentivized. In a recent decision, NAD noted that “the very existence of such a relationship must be disclosed” as “consumers may assess the credibility of a neutral, unbiased review differently than one made by someone paid by the advertiser. This is the case even if the reviewer did not let the incentive influence the review.”  In that case, NAD also determined that a blanket disclosure indicating some reviews may be incentivized was not sufficient. Instead, NAD said the disclosure should be made with each incentivized review.  

BBB policy (like the policies of Google, Yelp and Amazon) prohibits the acceptance of customer reviews from individuals who have received or been offered compensation. Our policy applies even if a disclosure were made. BBB’s Customer Review Acceptance Policy says we will not accept any review if the reviewer was compensated by the subject business, which includes the offer or receipt of a discount or free product. 

Moreover, BBB may include a notice on the Business Profile to inform consumers about the practice. BBB has stated that a BBB Accredited Business’s use of incentivized consumer reviews violates the BBB Standards for Trust.