FTC accuses Fair review site of deceptive ratings and rankings

Top picks, star ratings, in-depth reviews. Many consumers won’t buy anything without consulting a third-party review site or seeing what other customers have to say. But how much of these ratings are the product of deals between “independent” sites and companies willing to pay for better games? Are these reviews really coming from satisfied customers, or are they coming from employees who were instructed to stuff a five-star rating into a ballot box? These are allegations in a lawsuit against LendEDU, a website the Federal Trade Commission says falsely claims to provide “objective” evaluations of financial products. Does the proposed settlement in this case signal that it is time to review your own examination practices?

Many consumers visit LendEDU when comparison shopping for student loans, personal loans and credit cards because it promises “honest,” “accurate” and “unbiased” ratings and reviews. For example, LendEDU’s student loan refinance page provides a rate schedule, rankings, star ratings, and reviews of the companies it claims are the best or top. LendEDU and company executives stress that due to their “strict editorial integrity,” the ratings are “completely objective and not influenced by any compensation.” The Federal Trade Commission says that’s wrong.

According to the complaint, LendEDU increased the company’s numerical ranking and position on the rate schedule based on payments to LendEDU. For example, in an email to a student loan refinancing company that has dropped from first to third place in the ratings, LendEDU’s CEO said the company would pay LendEDU $9.50 per click. You can regain the number one position. LendEDU’s VP of Product later contacted the same company and suggested that it increase its pay-per-click rate to $16.50: “We wanted to keep [your company] Positioned as the first lender on our site, but we needed to justify the move from a commercial perspective. The company eventually agreed to pay $15 per click, and LendEDU kept the company in the lead. The complaint alleges that LendEDU offered a third-ranked position to another student loan refinancing company, paying $16 per click. The contract made it clear stipulates the ranking”[n]o below position 3. “

The complaint lists other examples of how the FTC said LendEDU defrauded salary ratings. What information are consumers told about these arrangements? As of mid-2016, there has been no progress. LendEDU then added a small text at the bottom of its website: “Site may receive compensation through third-party advertisers.” Around March 2019, after LendEDU learned of the FTC’s investigation, it listed companies elsewhere on its website that “may provide compensation to LendEDU.” But the FTC said these “disclosures” were placed where consumers were unlikely to see them.

This isn’t the only way LendEDU allegedly deceives consumers. On its own website and third-party review platforms, reportedly satisfied customers rave about the LendEDU experience. For example, on Trustpilot, 123 out of 126 reviews gave LendEDU the highest five-star rating. Here’s what three self-proclaimed consumers have to say:

• Kenny: “LendEDU showed me the light at the end of the tunnel. I was deep in student loan debt and then they showed up with a lifeboat and a warm blanket. The website was easy to navigate and with the help of their customer service team, I saved Lots of money to refinance. I can’t thank them enough and would recommend them to anyone!
• Scott: “Extremely user-friendly and easy to use. . . . What a pleasant surprise to be able to find personal finance education. As a student, high schools didn’t really offer any basic finance courses and credit cards were easy to get. Being able to research and learn more through LendEDU Lots of refreshing content.
• trace: “I didn’t know where to go and then I stumbled upon a[] LendEDU publishes articles. It’s full of great tips that can help. I ended up going to their website and there was a lot of useful stuff there too. They seem to be on it already! “

But according to the FTC, “Kenny” was an employee of LendEDU, “Scott” was responsible for managing the company’s 401(k) plan, and “Trace” was a friend of LendEDU staff. Additionally, LendEDU displays testimonials from purportedly satisfied customers on its website. For example, a consumer who provided a glowing recommendation was identified as “Sophia Loren.”no no That Sophia Loren. But according to the FTC, it’s also not any other Sophia Loren since LendEDU fabricated the endorsement.

The complaint alleges that LendEDU and three company executives falsely represented that ratings and rankings were not affected by compensation, failed to fully disclose that they were compensated for ratings and rankings, and falsely claimed that false reviews were the opinions of unbiased consumers. The proposed settlement establishes court-enforceable terms to address LendEDU’s deceptive conduct, requires clear future disclosures, and includes $350,000 in financial remedies. Once the proposed settlement appears in the Federal Register, the FTC will accept public comments for 30 days.

What can other companies learn from this case?

Respect your claim to objectivity. Many websites describe themselves as honest brokers of accurate information. But if you claim that compensation does not impact your content, then this must be a true statement. Furthermore, if you receive compensation from the companies you rate or rank, is this financial connection important to consumers in deciding whether to do business with those companies? If so, please clearly disclose the connection.

Avoid “imperative commands.” This is not the first time the FTC has challenged deceptive reviews, endorsements or recommendations. There are at least three situations where posting a customer review can go off the rails: 1) if the review does not reflect the reviewer’s actual experience; 2) if there is an undisclosed material connection between the reviewer and the advertiser – for example, the reviewer is an employee , friends, or family; 3) whether the advertiser is fabricating the review across the board. Please visit the FTC’s Endorsements, Influencers and Reviews page for compliance resources.