Amazon seller was sued for using negative reviews and faced a fine of US$12.8 million

Recently, the U.S. Federal Trade Commission (FTC) announced a lawsuit against a company called Cure Encapsulations Inc. The company became the first subject in FTC history for using false reviews to promote weight loss supplements on its Amazon store. Cure Encapsulations Inc. is a New York-based business owned by Naftula Jacobowitz.

Suspected of false advertising of weight loss supplements

Cure Encapsulations Inc. is accused of making false claims about the efficacy of the “garcinia cambogia” supplement it sold, while hiring third-party websites to write and post false five-star reviews on Amazon. The supplement, which is based on a plant from Indonesia, was falsely marketed as an effective weight loss aid but has in fact been shown to cause acute liver failure.

Cure Encapsulations Inc. sold pills containing the ingredient Garcinia Cambogia, also known as brindleberry, and marketed them as “natural” weight loss pills, according to the FTC complaint. These products are only sold on Amazon.

Transaction details of fake reviews

According to reports, as early as October 8, 2014, Jacobowitz sent an email to a website operator called www.amazonverifiedreviews.com, offering to pay US$1,000 in exchange for 30 reviews, with the purpose of The product’s average rating improved from 4.2 to 4.3, and it hopes to maintain its “five-star” rating. The site then posted a slew of fake five-star reviews, some of which claimed the supplement was a “powerful appetite suppressant” that “effectively blocks fat formation.” However, the FTC found that these claims had no factual basis.

FTC’s reaction and penalties

FTC Director Andrew Smith said in a statement: “When a company buys fake reviews to boost its ratings on Amazon, it harms not only consumers but also businesses that follow the rules.”

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According to the settlement agreement reached by both parties, Cure Encapsulations Inc. will no longer make unproven claims about any dietary supplement, food or drug as “weight loss, appetite suppressant, fat suppression or disease treatment” unless it has reliable scientific evidence to support its claims. Additionally, the company is prohibited from making false statements regarding product endorsements.

As part of the settlement, Cure Encapsulations Inc. will also face fines of up to $12.8 million. However, after paying $50,000 to the FTC and some unpaid income tax obligations, the remaining penalties will be put on hold.

Amazon’s response

Regarding this incident, Amazon issued a statement saying: “We welcome the FTC’s action. We invest significant resources to protect the integrity of product reviews on our platform because we know that customers value the experiences shared by other shoppers. Even though Single untrue comments are not allowed. ”

It is worth noting that the FTC also announced that it will establish a special working group aimed at monitoring and combating anti-competitive behavior in the US technology market.