The Federal Trade Commission brought its first successful case against an online company for buying fake Amazon reviews to sell a shoddy product. The agency filed its complaint on February 19, and reached a settlement that included a $12.8 million fine on the 26th.
It’s the Platonic ideal of a modern scam: The defendant is a company called Cure Encapsulations, which is based in Williamsburg, Brooklyn, and owned by a man who alternately goes by Naftula Jacobowitz, Nat Jacobs, and Nate Jacobs. The product in question is a purported weight loss supplement and appetite suppressant made from the Indonesian fruit garcinia cambogia (the fruit looks like a tiny green pumpkin and is associated with liver failure).
The supplement also advertises 600 milligrams of hydroxycitric acid (HCA) per serving — derived from the plant and positioned as the active ingredient. There is no scientific proof that HCA affects weight loss, though it is used to treat colitis and inflammatory bowel disease.
Nevertheless, in its Amazon description, Cure Encapsulations promised, “Studies have shown that this TIME-TESTED fruit has a myriad of amazing properties” and “Literally BLOCKS FAT From Forming!” The FTC’s complaint notes that all the sales of Cure Encapsulations products have been through Amazon, and that none of its promises are scientifically substantiated.
The company has been buying Amazon reviews of this product since at least October 2014. The complaint includes an email from Jacobowitz to the owner of the fake review seller Amazon Verified Reviews offering the site owners $1,000 to write him an initial 30 reviews, and suggesting a longer-term partnership to keep his product’s rating above 4.3 stars.
Though this is the FTC’s first major action against fake online reviews, Amazon has struggled with them for years. Even after banning the practice of “incentivized reviews” in October 2016, reviewers-for-hire remained one of the most common scams on the platform, and the company sued more than 1,000 “freelancers” who were offering review writing services on the gig platform Fiverr in 2015. At this point, a case as simple Cure Encapsulations is actually pretty surprising.
Amazon’s current system for detecting fake reviews is so rigid and oversensitive that, as The Verge’s Josh Dzieza reported last December, small brand competitors on the platform have started using it as a weapon against each other. Dzieza used the example of seller Zac Plansky, who used to sell rifle scopes on Amazon Marketplace:
Last August, Zac Plansky woke to find that the rifle scopes he was selling on Amazon had received 16 five-star reviews overnight. … As a precaution, he reported the reviews to Amazon. Most of them vanished days later — problem solved — and Plansky reimmersed himself in the work of running a six-employee, multimillion-dollar weapons accessory business on Amazon. Then, two weeks later, the trap sprang. “You have manipulated product reviews on our site,” an email from Amazon read. “This is against our policies. As a result, you may no longer sell on Amazon.com, and your listings have been removed from our site.” A rival had framed Plansky for buying five-star reviews, a high crime in the world of Amazon. The funds in his account were immediately frozen, and his listings were shut down.
In a statement provided to The Verge about the Cure Encapsulations case, Amazon said it “welcome[s] the FTC’s work in this area,” and added, “Even one inauthentic review is one too many. We have clear participation guidelines for both reviewers and selling partners and we suspend, ban, and take legal action on those who violate our policies.”
Cure Encapsulations is sort of a double whammy, in that it highlights the rampant fake review problem on Amazon, as well as the possibly even wilder one in the beauty and “wellness” industries. As Cheryl Wischhover reported for Vox last October, after the cult beauty brand Sunday Riley was caught asking its employees to write fake customer reviews of its products using manipulated IP addresses and multiple aliases, the practice is common in big industries with lots of competition. The previous September, she found that beauty brands were using third-party companies to “gift” their products to people in exchange for Sephora and Amazon reviews.
Though this investigation happened after Amazon started actively purging suspicious-looking reviews and forbidding the gifting of products in exchange for them, Wischhover used the free online tool Fakespot to test how well the measures had worked. She used the example of Baebody eye gel, which had more than 7,000 reviews and a 4.5-star rating at the time and was listed as a top 20 Amazon beauty best-seller, despite having only 218 Instagram followers and a vague, uninformative website. Fakespot gave these reviews a C rating and considered 60 percent of the reviews of Baebody “unreliable.”
As of this morning, the product has almost 14,000 reviews; Fakespot calls more than 63 percent of them unreliable.
Amazon’s new “Elements” brand started moving into the lucrative supplements space in the spring of 2017. The reviews on these products could be considered more reliable, except Amazon’s in-house brands get most of their early reviews from members of the company’s Vine program — who receive the products, for the most part, for free.
All this is to say that at this point, no online review looks any more or less fake than any other — particularly when you rope in Goop-era misleading pseudoscience — so the FTC certainly has its work cut out for it.