As a firm that supports Amazon entrepreneurs, we often field platform-specific e-commerce questions.
We've put together this legal guide as a resource for Amazon FBA and FBM sellers. Here, you'll find answers to the above questions, plus additional information about the laws and regulations affecting Amazon entrepreneurs. Please bookmark and check back monthly.
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LIVE BY THE STAR: THE IMPORTANCE OF CONSUMER REVIEWS
Perhaps journalist David Streitfeld said it best in his 2012 article "The Best Book Reviews Money Can Buy":
"In many situations, [online reviews] are supplanting the marketing department, the press agent, advertisements, word of mouth and the professional critique."
NEARLY EVERYBODY READS - AND TRUSTS - USER REVIEWS
Streitfeld's right. These days, Amazon sellers live and die by the star.
A recent PriceWaterhouseCoopers study concluded that 88% of North Americans research products online before buying. Couple that stat with another fact: the cost of banner advertising has nearly doubled over the past five years.
MARKETING OVERLOAD = USER REVIEW RELIANCE
Every day, the average person is bombarded by over 6,000 marketing messages. As a result, we've become talented at tuning them out. That's why 99% of us head straight for the comments section -- swiftly bypassing any traditional advertising on the way down -- when we're considering an online purchase.
THE IMPORTANCE OF ASR ON AMAZON
On Amazon, there's also a technical significance attached to a star-review rating. It involves something called the ASR, or Amazon Sales Rank. A seller's ASR does double duty:
HOW TO SPOT A FAKE REVIEW
In her book The Discourse of Online Consumer Reviews, Dr. Camilla Vasquez outlined several tell-tale signs of a fake review. Of course not every review featuring one or more of these characteristics is a fake review, but patterns may be suspect. Vasquez advises:
"A typical red flag is that they are usually posted by someone who has no other reviews listed and they don't describe the product or service with certain details."
Other characteristics reviews that may indicate a fake review:
Who writes fake reviews:
FTC'S STANCE ON FAKE REVIEWS
The Federal Trade Commission is the nation's "consumer watchdog." Its mission is to rid the country of unscrupulous business practices. A quasi-governmental office, commissioners are appointed, but enjoy autonomy.
In short, the FTC has a zero tolerance stance on fake reviews. The act is considered a clear-cut example of "unfair and deceptive marketing."
COMMON COMPETITOR TACTICS USED AGAINST AMAZON SELLERS AND MARKETERS
Reviews and ratings are the backbone of Amazon storefronts. Some proprietors do everything in their powers to hustle high marks. Other folks let the chips fall where they may, instead choosing to focus on quality and customer service.
Another set of Amazon entrepreneurs takes a middle road. This group actively and creatively solicits positive reviews. The operative word being "creatively". While some of their tactics may raise Pollyanna's eyebrow, technically, they're operations buoy above compliant waters.
And then there's the fourth group. The set willing to risk legal censure - and in some cases public shaming -- for the sake of sales. These are the people who aren't ashamed to play dirty and do things like:
|Illegal Tactic||Possible Legal Remedy|
|Write - or pay other people to write - negative reviews on competitors' products and pages in an effort to eliminate the competition;||Defamation; Unfair and Deceptive Marketing|
|Posting unfair criticism on a competitor's page;||Trade Libel; Defamation|
|Use destructive software that messes with competitors' rankings;||Computer Fraud and Abuse Act|
|Fake counterfeit and copyright complaints in order to remove rivals;||Lanham Act; FTC Act; State Intellectual Property Laws|
|Crossing the copyright line by infringing on a competitor's brand;||Lanham Act; State Trademark Copyright and Tortious Interference laws|
|Drain a rival's pay per click budget by clicking on their ads incessantly.||FTC Act; Unfair Competition|