In the camp industry, online reviews play an important role in the marketing and sales process for both campers and staff. Encouraging our community to share their genuine experiences can enhance camp's reputation and help potential campers and staff make informed decisions. At the same time, camps should be aware of the Federal Trade Commission's new rule called "Fake or False Consumer Reviews, Consumer Testimonials, or Celebrity Testimonials."
An Overview of the Rule
The FTC's latest regulation prohibits company officers and managers from posting reviews or testimonials about their own camps without clearly disclosing their relationship. This means that any review or testimonial written by someone affiliated with the camp must openly acknowledge that connection. The rule extends to prohibiting businesses from sharing insider reviews unless the relationship is explicitly disclosed.
As the FTC explains it in a recent press release: "The rule prohibits a company’s officers and managers from writing reviews or testimonials about the business or its products or services without clearly disclosing their relationship. Businesses are also prohibited from disseminating testimonials by company insiders without clear disclosures." The FTC goes on: "A similar prohibition exists for officer or manager solicitations of reviews from their immediate relatives or from employees or agents of the business, and when officers or managers ask employees or agents to seek such reviews from relatives." So, if an owner, director, senior staff member, or even a family member of an employee writes a review, they must clearly state their connection to the camp.
While the the rule is new, it really codifies longstanding FTC principles. Under the FTC Act, a practice is considered deceptive if it's likely to mislead the consumer where: (a) the consumer’s interpretation of the omission is reasonable; and (b) the omission is material. Both factors are met when an online review -- which is purportedly neutral -- is actually given by an insider with an undisclosed interest in the camp.
The Implications of Non-Compliance
Of course, the next question becomes one of consequences: What if we do this anyway? What are the consequences of non-compliance? Although the camp industry is relatively small and does not typically attract regulatory scrutiny beyond the camp regulations themselves, this doesn't mean that we are exempt from the FTC's oversight.
The consequences of not adhering to these guidelines can be significant. If a complaint is lodged with the FTC -- by a disgruntled family, for example -- the agency may choose to investigate. And if the FTC does pursue an investigation, camp could face penalties and fines for violating the rule.
Moreover, once findings are made public through a "consent order," it could open the door for private lawsuits. Plaintiffs' attorneys may leverage these outcomes to pursue claims under state unfair trade practices laws, which often provide even broader protections than federal regulations.
Moving Forward
To avoid potential pitfalls, camps should take two key steps: First, consider if there are any insider reviews about your camp out there in the world. If so, it's a good idea to delete them or add a little disclosure explaining the reviewer's relationship with the camp -- once the relationship is disclosed, the review is no longer misleading. Second, you can add a policy so your staff know that they shouldn't leave these types of reviews without adequate disclosures. While these steps help mitigate legal risk, they are also simply an ethical business practice.