Is there anything that can’t be delivered to your doorstep? (Yes, home renovators will attest that you can even have it delivered to your front door.) Emerging subscription models can offer convenience to customers, but only if companies adhere to established consumer protection principles. The FTC’s proposed settlement with snack seller UrthBox, Inc. is intended to alert industry members to consumer reviews and the Restoring Online Shopper Confidence Act.
San Francisco-based UrthBox delivers monthly premium packages to snack-craving consumers. Consumers can sign up for a 1-month, 3-month or 6-month subscription, which costs approximately $20 to $200 per month, depending on the size of the box. UrthBox requires consumers to pay the entire subscription fee upfront. (More on the company’s subscription practices later.)
For much of 2017, UrthBox ran an incentive program that encouraged consumers to post positive reviews of its snack boxes on the Better Business Bureau website. For example, when people call UrthBox’s customer service line with unrelated questions, UrthBox representatives send them free snack boxes if they post a positive review on the BBB.
This is how it works. UrthBox representatives direct customers to click on a link that takes them to the customer reviews page on the BBB website. The representative then told people they could post a positive review, verify the review with the BBB, and email a screenshot of the review to UrthBox. After customers sent in the required proof, UrthBox sent them a free snack box, and UrthBox representatives received a cash reward.
However, the BBB requires customers to prove that they “did not receive any incentive or payment from the business to write a review.” Without this accreditation, the BBB will not publish the review. Therefore, according to the complaint, UrthBox’s incentive program violated the FTC Act in two ways. First, in many cases UrthBox incorrectly represented that positive customer reviews on the BBB website reflected the independent opinions of ordinary unbiased customers. Second, the complaint alleges that UrthBox failed to fully disclose that some customers received compensation for posting reviews, including free snack boxes.
As a result of UrthBox’s alleged deceptive practices, reviews of the company on the BBB website jumped from 9 in 2016 (all negative) to 695 in 2017 (612 positive, 15 neutral and 68 negative) – resulting in ” Customer review ratings “significantly improved”. According to the complaint, the vast majority of reviews are generated through UrthBox’s incentive program. The problem, of course, is that when people consider doing business with a company, consumer reviews are one of the first things they check. The FTC said it is important for consumers to understand the rewards program before reading these positive reviews on the BBB website.
The BBB website isn’t the only place UrthBox uses these tactics. The FTC said UrthBox ran a similar deceptive incentive scheme on TrustPilot.com, a third-party website that publishes customer reviews of online businesses. Additionally, the complaint alleges that UrthBox offered free snack boxes or store credit to consumers for posting about its products on Twitter, Instagram, Tumblr and Facebook, but did not have systems in place to monitor whether consumers disclosed financial ties to the company. arrange.
The FTC stated that UrthBox also violated ROSCA and the FTC Act by promoting “free trials” online or telling consumers “the first box is free!” Just pay for shipping” and then automatically enrolls them in a six-month subscription plan. Since UrthBox charges consumers for the entire subscription term at once, the only way for consumers to avoid a hefty upfront payment is to place a subscription once the free box ships. Cancel your subscription before the first day of the month. However, as the complaint alleges, because UrthBox did not clearly disclose the terms of its program (which also violates ROSCA), many consumers did not wait until they opened their credit card statement and saw charges that they had not expressly agreed to. Items subject to unexpected charges.
To resolve the case, UrthBox and company executive Behnam Behrouzi agreed to change the way they do business. The proposed order also includes $100,000 in monetary remedies available to consumers who were deceived by UrthBox’s misleading trial offers. Once the proposed settlement is published in the Federal Register, you will have 30 days to submit public comments.
Whether your company uses user-generated actions, online subscriptions, or both, the proposed settlement offers advice for marketers.
Incentivizing consumer reviews is unwise. Recent FTC settlements reveal a range of deceptive practices: family members, friends and employees posting reviews without disclosing their affiliation with the company, and third-party businesses paying to post reviews to boost product ratings on major online retail sites Vendors and offer undisclosed prizes to those who send referrals. To avoid confusion in audits, marketers should be careful not to distort the system.
Online “free trial” leads to key revelations. The FTC has filed a lot of ROSCA cases recently, and they can expect more if companies continue to trick consumers into accepting “free trials” with expensive strings attached. If you use negative options (including “trial”) in your online marketing, ROSCA requires that you:
- Clearly and conspicuously disclose all important terms of the transaction before obtaining the consumer’s billing information,
- Obtain explicit informed consent from consumers before charging, and
- Provide consumers with an easy way to stop recurring charges.
