Office of Commissioner 

UNITED STATES OF AMERICA 

Federal Trade Commission 

WASHINGTON, D.C. 20580 

Rohit Chopra 

STATEMENT OF 

COMMISSIONER ROHIT CHOPRA 

JOINED BY COMMISSIONER REBECCA KELLY SLAUGHTER 

Regarding Final Approval of the Sunday Riley Settlement 

Commission File No. 1923008 

November 6, 2020 
 

 

2 See Madge Maril, The New Sunday Riley Clean Rinse Serum Is A Chemical Exfoliator — For Your Scalp, THE ZOE REPORT 

 

 

1 See Amenity Kits, UNITED AIRLINES, https://www.united.com/ual/en/us/fly/travel/inflight/amenity-kits.html (last visited on Oct. 

6, 2020).

(Apr. 23, 2020), https://www.thezoereport.com/p/the-new-sunday-riley-clean-rinse-serum-is-a-chemical-exfoliator-for-yourscalp-22841796. 

Summary 

• The FTC is doubling down on its no-money, no-fault settlement with Sunday Riley, who was 

charged with egregious fake review fraud. This weak settlement is a serious setback for the 

Commission’s credibility as a watchdog over digital markets. 

• To defend this settlement, the Commissioners supporting this outcome claim they had no 

basis to seek more than $0. Their analytical approach favors the fraudster, and it will 

undermine our mission in future cases. 

• The Commission can end its no-consequences settlement policy by publishing a Policy 

Statement on Equitable Monetary Remedies, restating legal precedent into formal rules, and 

designating specific misconduct as penalty offenses through an unused FTC Act authority. 

Introduction 

With millions of retailers closed during the pandemic, Americans are relying more than ever on 

online reviews to compare products. Fake reviews are polluting digital marketplaces, harming 

consumers and honest sellers. 

Fake review fraud is illegal, and the FTC has a responsibility to combat it. In the fake review 

fraud case before us today, Chairman Simons, Commissioner Phillips, and Commissioner Wilson 

have voted to finalize a settlement with a popular cosmetics company, Sunday Riley. The 

settlement includes no redress, no disgorgement of ill-gotten gains, no notice to consumers, and 

no admission of wrongdoing. Instead, Sunday Riley is merely being ordered to not break the law 

again. 

Unsurprisingly, little has changed for Sunday Riley. Sephora, where Sunday Riley is alleged to 

have committed its fraud, continues to be a major sales channel. United Airlines retains its highprofile exclusive deal with Sunday Riley.1 Influencers continue to promote the brand, which 

recently launched a new product line.2 

Despite almost unanimous opposition to the proposed settlement, Chairman Simons, 

Commissioner Phillips, and Commissioner Wilson are voting to finalize it without changes. 

Rather than taking action today, they kick the can down the road and suggest the Commission 

will one day take this problem more seriously. But it is not every day that whistleblowers come 

forward to reveal massive fake review fraud. This case was an opportunity for the Commission 

to signal that disinformation campaigns have costs. Instead, they’re sending a clear signal that 

the cost is $0. 

The Commission’s insistence on seeking only a number that was 100 percent accurate led us to 

seek a number that was 100 percent inaccurate. This was not our only option. As I described in 

my original statement on this matter, empirical literature shows that positive reviews can 

2 
3 Comments are available at Fed. Trade Comm’n., Sunday Riley Modern Skincare, LLC; Analysis To Aid Public Comment, 

 

 

 

 

 

 

 

 

Docket ID FTC-2019-0086 (Oct. 25, 2019), https://www.regulations.gov/document?D=FTC-2019-0086-0001 [Hereinafter 

Sunday Riley AAPC]. 

4 See Audrey Cooper, Comment No. 06 on Sunday Riley AAPC, FTC File No. 1923008 (Oct. 29, 2019), 

https://www.regulations.gov/document?D=FTC-2019-0086-0006; Ivy M., Comment No. 08 on Sunday Riley AAPC, FTC File 

No. 1923008 (Oct. 29, 2019), https://www.regulations.gov/document?D=FTC-2019-0086-0008; Anonymous Consumer, 

Comment No. 10 on Sunday Riley AAPC, FTC File No. 1923008 (Oct. 30, 2019), 

https://www.regulations.gov/document?D=FTC-2019-0086-0010; Nupur Patel, Comment No. 21 on Sunday Riley AAPC, FTC 

File No. 1923008 (Nov. 1, 2019), https://www.regulations.gov/document?D=FTC-2019-0086-0021; Anonymous Consumer, 

Comment No. 22 on Sunday Riley AAPC, FTC File No. 1923008 (Nov 4, 2019), 

https://www.regulations.gov/document?D=FTC-2019-0086-0022. 5 See Jeffrey Heft, Comment No. 03 on Sunday Riley AAPC, FTC File No. 1923008 (Oct. 28, 2019), 

https://www.regulations.gov/document?D=FTC-2019-0086-0003; Anonymous Consumer, Comment No. 04 on Sunday Riley 

AAPC, FTC File No. 1923008 (Oct. 28, 2019), https://www.regulations.gov/document?D=FTC-2019-0086-0004; Terri 

Morgenson, Comment No. 5 on Sunday Riley AAPC, FTC File No. 1923008 (Oct. 28, 2019), 

https://www.regulations.gov/document?D=FTC-2019-0086-0005; Anonymous Consumer, Comment No. 10 on Sunday Riley 

AAPC, FTC File No. 1923008 (Oct. 30, 2019), https://www.regulations.gov/document?D=FTC-2019-0086-0010; Anonymous 

Consumer, Comment No. 11 on Sunday Riley AAPC, FTC File No. 1923008 (Oct. 30, 2019), 

https://www.regulations.gov/document?D=FTC-2019-0086-0011; Kristina, Comment No. 16 on Sunday Riley AAPC, FTC File 

No. 1923008 (Oct. 30, 2019), https://www.regulations.gov/document?D=FTC-2019-0086-0016; Linda Pan, Comment No. 20 on 

Sunday Riley AAPC, FTC File No. 1923008 (Nov. 1, 2019), https://www.regulations.gov/document?D=FTC-2019-0086-0020; 

 

materially and measurably increase sales. When a newly launched product attracts a slew of 

positive reviews, this can lead to a herd effect that generates massive revenue, because these 

reviews may affect how e-commerce platform algorithms prioritize listings. Given these effects, 

the Commission was in a strong position to estimate ill-gotten gains. But rather than relying on 

evidence and analysis, Chairman Simons, Commissioner Phillips, and Commissioner Wilson 

relied on a less rigorous approach that favors the fraudster. 

The Commission’s decision sends the unfortunate message to other fake review fraudsters that 

they, too, might be able to extract a no-consequences settlement from the FTC. In matters 

involving dishonest or fraudulent conduct, I do not support seeking nothing in settlement 

negotiations. To be credible as a digital regulator, we must change this approach. 

Background on Sunday Riley’s Scam and the No-Consequences Settlement 

Sunday Riley is a successful cosmetics brand founded and operated by Ms. Sunday Riley. As 

detailed in the Commission’s allegations, in 2018, Ms. Riley orchestrated an elaborate scheme to 

generate fake reviews of her firm’s high-end skincare products, a practice that harms both 

consumers and honest competitors. To address these allegations of egregious lawbreaking, 

Chairman Simons, Commissioner Phillips, and Commissioner Wilson subsequently voted to 

propose a settlement under which Sunday Riley agreed to not break the law again, and to simply 

submit periodic paperwork. 

During the public comment period that followed the settlement proposal, consumers pleaded 

with the Commission to do more to hold the company and its CEO accountable.

3

 Numerous 

commenters detailed their personal experiences relying on reviews to purchase Sunday Riley 

products. One commenter warned that this order further diminishes their confidence in ordering 

skincare products online, and another commenter, a retail employee, observed that, when 

consumers lose trust, all sellers suffer.4 Many called the settlement a “slap on the wrist” and 

argued it would be a “green light” for further fake review fraud.

5

 An objection filed by 

3 
Victoria Burns, Comment No. 28 on Sunday Riley AAPC, FTC File No. 1923008 (Nov. 18, 2019), 

 

 

 

 

 

 

https://www.regulations.gov/document?D=FTC-2019-0086-0028; Anonymous Consumer, Comment No. 32 on Sunday Riley 

AAPC, FTC File No. 1923008 (Nov. 18, 2019), https://www.regulations.gov/document?D=FTC-2019-0086-0032; Anonymous 

Consumer, Comment No. 42 on Sunday Riley AAPC, FTC File No. 1923008 (Nov. 25, 2019), 

https://www.regulations.gov/document?D=FTC-2019-0086-0042; Sophia Brunetti, Comment No. 45 on Sunday Riley AAPC, 

FTC File No. 1923008 (Nov. 27, 2019), https://www.regulations.gov/document?D=FTC-2019-0086-0045. 6 Consumer Reports added that “[a]llowing companies to engage in and profit from egregious behaviors with merely a prospect 

of penalties if caught a second time and some limited recordkeeping responsibilities will hardly strike fear in the heart of 

potential fraudsters. Given the Commission’s limited staff and capacity to police an $18 trillion economy, unscrupulous actors 

know there is a relatively low chance of getting caught by the FTC. Those that do shouldn’t get what amounts to a “Get Out of 

Jail Free” card for their first offense.” See Maureen Mahoney on Behalf of Consumer Reports, Comment No. 46 on Sunday Riley 

calculating restitution is the total revenue of the enterprise. See, e.g., FTC v. Kuykendall, 371 F.3d 745, 764 (10th Cir. 2004) 

(holding, in a contempt action, that, after the Commission establishes a presumption of reliance, “the district court may use the 

Defendants’ gross receipts as a starting point” for awarding monetary relief). In my view, there is no doubt that Sunday Riley’s 

fake reviews met this standard – a view confirmed by the comments received by the Commission in response to this proposed 

settlement. 8 FTC v. Commerce Planet, Inc., 815 F.3d 593, 603 (9th Cir. 2016) (internal quotation marks omitted). This also makes sense as a 

matter of policy, since resolving uncertainty in favor of wrongdoers only incentivizes them to keep poor records.

9 It has taken the Commission nearly a year to finalize this settlement, and, in the intervening months, the Supreme Court has 

granted certiorari to challenges to the FTC’s authority under Section 13(b), while issuing a ruling in Liu v. SEC that raised 

questions about whether “legitimate expenses” should offset disgorgement orders. See Liu v. SEC, 140 S. Ct. 1936, 1946 (2020). 

The majority does not argue that the Commission lacked authority to seek monetary relief in this matter, nor does it argue that the 

expenses incurred in furthering this scheme would be seen as legitimate.

10 Press Release, Fed. Trade Comm’n, Firm to Pay FTC $250,000 to Settle Charges That It Used Misleading Online "Consumer" 

AAPC, FTC File No. 1923008 (Nov. 27, 2019), https://www.regulations.gov/document?D=FTC-2019-0086-0046. 7 Generally, if the Commission can establish that materially false claims were widely disseminated, the starting point for 

and “Independent” Reviews (Mar. 15, 2011), https://www.ftc.gov/news-events/press-releases/2011/03/firm-pay-ftc-250000-

settle-charges-it-used-misleading-online. 

 

Consumer Reports noted that Sunday Riley “will face no real consequences for its actions” and 

detailed the Commission’s clear legal authority to go beyond the proposed no-money, no-fault 

order.6 

 

Rejecting these nearly unanimous comments, the agency is doubling down on its deficient 

approach, with Chairman Simons, Commissioner Phillips, and Commissioner Wilson voting to 

finalize the proposed no-money, no-fault settlement without changes. They tout the paperwork 

the order requires, while warning that, if Ms. Riley and her company are charged with breaking 

the law again, they may face an actual penalty. This approach does little to deter digital 

deception, and the Commission can and must do better. 

Commission’s Authority to Seek Equitable Monetary Relief 

The objection filed by Consumer Reports was correct in arguing that the Commission can seek 

monetary relief in cases such as this one. For companies engaged in deceptive advertising, full 

redress is an appropriate starting point for estimating restitution, with wrongdoers bearing the 

burden of showing which sales were untainted by deception.7 Any uncertainty in this estimation 

is to be resolved not against consumers but against “the wrongdoer whose illegal conduct created 

the uncertainty.”8  

Because the agency can seek monetary relief in federal court, through either Section 13(b) or 

Section 19, past Commissions have been able to recover funds in cases involving fake reviews 

without time-consuming litigation.

9 In 2011, the FTC charged Legacy Learning Systems with 

using fake reviews, in the form of undisclosed paid endorsements, to sell DVDs.10 The 

4 
 

 

 

 

 

 

 

 

 

11 See Compl. ¶ 8, In re Legacy Learning Sys. Inc., Docket No. C-4323 (2011), 

https://www.ftc.gov/sites/default/files/documents/cases/2011/06/110610legacylearningcmpt.pdf. Importantly, Legacy Learning 

Systems required its affiliates to comply with FTC guidelines, and some of the fake reviews at issue actually included disclosures 

of their authors’ material connections. These disclosures, as well as Legacy’s monitoring, were charged to be insufficient, but still 

represent a greater effort at ensuring compliance than what was undertaken by Sunday Riley. See id. ¶¶ 8–9. 12 Chairman Simons, Commissioner Phillips, and Commissioner Wilson may not believe Sunday Riley’s alleged scheme was 

profitable, but Sunday Riley and her employees certainly did. See Compl. ¶ 10, In the Matter of Sunday Riley Modern Skincare, 

LLC, File No. 1923008 (2019) (quoting Sunday Riley as claiming review manipulation “directly translates to sales”); Id. ¶ 12 

(quoting a Sunday Riley Account Manager instructing employees that “[t]he power of reviews is mighty”).

13 Statement of Chairman Joseph J. Simons and Commissioners Noah Joshua Phillips and Christine S. Wilson In re Sunday Riley 

Modern Skincare, LLC, Fed. Trade Comm’n File No. 1923008 (Nov. 6, 2020). 14 If imposing reputational costs is important to the majority, it is unclear why they did not require Sunday Riley to notify its 

customers of the fraud or forbid the company from manipulating search results to suppress information about this action. Relying 

solely on news reports to justify no-money settlements ignores the elaborate steps companies can take to “manage” their 

reputations, just as they “manage” consumer reviews. See Craig Silverman, How To Game Google To Make Negative Results 

Disappear, BUZZFEED NEWS (June 27, 2019), https://www.buzzfeednews.com/article/craigsilverman/google-searchmanipulation-online-reputation-expert (reporting on a “global reputation management industry offering to cover up past arrests, 

poor customer reviews, allegations of fraud, and other character-killing online content.”). 15 Sunday Riley, SEPHORA, https://www.sephora.com/brand/sunday-riley (last visited on Oct. 6, 2020). 16 Supra note 1. 

Commission settled the matter for $250,000, or approximately five percent of sales attributable 

to affiliates who posted reviews, in spite of the fact that the DVDs worked as advertised, that the 

reviews were posted by third parties, and that our complaint did not detail which consumers, if 

any, relied on the reviews.11 

We obtained this judgment with the same authority we have today, employing the same legal 

theory we are employing today, in the same forum we are using today. The only thing that has 

changed is the five Commissioners responsible for the decision. 

A More Permissive Approach to Fake Reviews 

While our authority remains the same as it was in 2011, Chairman Simons, Commissioner 

Phillips, and Commissioner Wilson are signaling a shift in the FTC’s approach to policing fake 

reviews. Ordinarily, as discussed above, the Commission approximates disgorgement based on a 

firm’s total revenue connected to the illegal practice, which incentivizes the firm to rebut that 

approximation with more granular data. But here, Chairman Simons, Commissioner Phillips, and 

Commissioner Wilson abandon this time-tested and judicially recognized approach, announcing 

it would be inappropriate to even approximate Sunday Riley’s illegal profits. The predictable 

result of this new approach is a windfall for fake review fraudsters, who can count on their 

misconduct carrying no real costs.

12 

Chairman Simons, Commissioner Phillips, and Commissioner Wilson claim this settlement 

imposes certain hidden costs, but they seem to rely on speculation. They suggest the settlement 

may have a “reputational effect,”13 but they cite no data or analysis, and it is unclear why they 

assume that news reports would affect Sunday Riley’s sales, while the consumer reviews at issue 

in this case would not.14 They claim that Sunday Riley may face collateral consequences from 

business partners, but the company continues to be promoted on Sephora,15 and it remains the 

“signature skincare partner” of United Airlines.

16 Finally, they suggest Sunday Riley could face 

5 
 

consequences from other regulators, but that should not justify a no-consequences settlement by 

this regulator.17 

Ultimately, even if there were concern that seeking full redress is excessive, is the logical 

conclusion to then ask for zero? As I noted when this matter was proposed for public comment, 

there is extensive literature on the impact of fake reviews,18 and the Commission has authority to 

compel production of granular sales data from both Sunday Riley and Sephora if necessary. I am 

confident we could have developed a reasonable estimate of harm and ill-gotten gains, as we did 

in 2011, rather than presuming fake reviews are harmless or applying a different legal standard 

because Sunday Riley’s conduct doesn’t resemble that of other FTC defendants. 

If Commissioners believe that moving the agency toward a more lenient approach against fake 

reviews is in the public interest, they should state as much. Alternatively, they could 

acknowledge that this settlement was mistaken and commit that they will change course. But 

claiming it was unrealistic to go beyond a no-money, no-fault order is not credible, and it will 

undermine us in future cases.19 

Ending No-Consequences Settlements 

As detailed in the comments in the official public docket and in my initial statement, the 

majority’s approach does not bode well for honest businesses looking to compete online. Sunday 

Riley’s alleged conduct was illegal, indefensible, and wrong – but it was also understandable. As 

explained by one leading e-commerce consultant, “Incentives are incredibly high for brands to 

create fake reviews or incentivize reviews,” and many brands feel, “If I don’t do this, then I’m 

not staying level with my competition, I’m literally just falling behind.”20 

While the incentives to post fake reviews and engage in disinformation tactics are very high, the 

likelihood of getting caught and facing consequences appears to be very low. It may be common 

for platforms to remove fake reviews, but it is unclear – and entirely discretionary – how and 

whether platforms hold perpetrators accountable. In this case, for example, there are allegations 

17 The majority also misunderstands the role of individual liability, suggesting that this matter should be compared to the 

Commission’s 2019 settlement with Facebook, where no individuals were charged. But one mistake does not justify another. In 

this matter, the Commission’s complaint cited specific emails that Sunday Riley sent her staff, which provided an ample basis for 

charging her personally. In Facebook, the Commission opted to not interview Facebook’s CEO, so it is unknown whether similar 

evidence existed. In every case, the decision of whether to name an individual should be based on the facts and circumstances, 

not on the size or clout of a firm. 18 See, e.g., Georgios Askalidis & Edward C. Malthouse, The Value of Online Customer Reviews, RECSYS '16: PROCEEDINGS OF 

 

driving the bulk of the aforementioned increase” and that “the existence of reviews provides valuable signals to the customers, 

increasing their propensity to purchase”); Lev Muchnik et al., Social Influence Bias: A Randomized Experiment, 341 SCI. 647, 

 

observation window compared to an initial negative “down-vote”). 19 Importantly, Chairman Simons, Commissioner Phillips, and Commissioner Wilson do not dispute the complaint’s allegation 

that the company and its CEO broke the law. Indeed, Sunday Riley’s alleged conduct likely violated the penalty statutes of many 

individual states. If the majority was genuinely concerned about the litigation risk under the FTC Act of seeking monetary relief, 

we could have simply enlisted states with their own penalty claims. 20 Sapna Maheshwari, When Is a Star Not Always a Star? When It’s an Online Review, N.Y. TIMES (Nov. 28, 2019), 

THE 10TH ACM CONFERENCE ON RECOMMENDER SYSTEMS 155–58 (2016), https://dl.acm.org/citation.cfm?id=2959181 (finding 

that “the conversion rate of a product can increase by as much as 270 percent as it accumulates reviews....with the first 5 reviews 

649 (2013), https://science.sciencemag.org/content/341/6146/647 (finding that, for a given product, a single initial positive “upvote” creates an accumulating herd effect that results in a 25 percent higher average rating for that item at the end of a 5-month 

https://www.nytimes.com/2019/11/28/business/online-reviews-fake.html. 

6 
 

that at some point, Sephora detected Sunday Riley’s scheme, leading the retailer to delete certain 

reviews.21 But, as alleged in the complaint, Sunday Riley simply adjusted its tactics, directing 

employees to conceal their IP addresses to evade further detection.22 It is unclear whether 

Sephora took any further action, and Sunday Riley’s scheme became public only when a 

whistleblower came forward.23 

Given this spotty private policing, it is critical that, in the rare circumstances when law 

enforcement steps in, we send an unambiguous message that posting fake reviews is not worth 

the risk. Today’s no-money order, I fear, will have the opposite effect, sending the message that 

if you get caught and attract law enforcement scrutiny, the price you’ll pay is zero.24 

The problems with no-money orders were once widely understood. More than four decades ago, 

Robert Pitofsky, who would go on to serve on the Commission twice, including as its Chair, 

called no-money cease-and-desist orders “scandalously weak.”25 He, too, argued that they did 

little to deter wrongdoing and nothing to redress victims.26 Yet the Commission continues to rely 

on them, even in cases, like this one, involving allegations of clear dishonesty and fraud. 

When companies engage in egregious misconduct, a no-money, no-fault settlement is ineffective, 

especially when there appear to be no material disputes of fact or law. The Commission should 

formally signal that it is terminating its no-money, no-fault settlement approach for dishonest or 

fraudulent conduct by: 

• Publishing a Policy Statement on Equitable Monetary Remedies: The Commission 

should issue a Policy Statement on Equitable Monetary Remedies. At a minimum, it should 

establish a rebuttable presumption that the Commission will not pursue no-money 

settlements in cases involving dishonesty or fraud.27 This will help establish consistency in 

our enforcement program, ensuring that fraud carries consequences regardless of whether it 

is committed by a fly-by-night operation or by an established firm like Sunday Riley. 

21 Sunday Riley Compl., supra note 12, ¶ 9. 22 Id. 23 See u/throwawayacctSRiley, Sunday Riley Employee: We Write Fake Sephora Reviews, REDDIT (Oct. 15, 2018, 4:21 PM), 

through the roof?” Supra note 20. 25 Irving Scher et al., Part II – FTC Improvement Act, 45 ANTITRUST L.J. 96, 117 (1976). 26 Here’s how Pitofsky described the effects of no-money orders on the broader marketplace: 

Businessmen engaged in fraudulent practices knew in advance that the worst that could happen to them in 

most cases would be that if a fraud were detected, and if the Commission decided to proceed against that 

company as opposed to hundreds of other companies engaged in similar practices, and if the complaint ever 

proceeded to a conclusion, they would then be asked to discontinue the practice. In effect, the most 

significant deterrent to engaging in fraudulent practices in those days was the considerable lawyers’ fees that 

would be generated by a Commission investigation. 

Id. 

27 See Statement of Commissioner Rohit Chopra In re Truly Organic, Fed. Trade Comm’n File No. 1923077 (Sept. 19, 2019), 

https://www.ftc.gov/public-statements/2019/09/statement-commissioner-rohit-chopra-matter-truly-organic (calling on the 

Commission to issue a policy statement on equitable monetary remedies). Importantly, there are many cases that do not involve 

dishonesty or fraud – such as cases involving unfair practices – where monetary relief is also appropriate. 

https://www.reddit.com/r/SkincareAddiction/comments/9ogete/psa_sunday_riley_employee_we_write_fake_sephora/. 24 This view echoes that of Fakespot chief executive Saoud Khalifah, who warned, following the announcement of this 

settlement, that “[n]ow, everybody is like, O.K., if that’s the penalty, then why not write more fake reviews and pump ourselves 

7 
28 See 15 U.S.C. § 57a. 29 Press Release, Fed. Trade Comm’n, FTC Issues Staff Report on Made in USA Workshop, Seeks Comment on Related 

 

 

 

 

 

 

Proposed Rulemaking for Labeling Rule (June 22, 2020), https://www.ftc.gov/news-events/press-releases/2020/06/ftc-issuesstaff-report-on-made-in-usa-workshop. 30See Statement of Commissioner Rohit Chopra Regarding the Endorsement Guides Review, Fed. Trade Comm’n File No. 

P204500 (Feb. 12, 2020), https://www.ftc.gov/public-statements/2020/02/statement-commissioner-rohit-chopra-regardingendorsement-guides-review. This would also reduce gamesmanship by fraudsters around our Section 13(b) authority. 31 The Commission can resurrect Section 5(m)(1)(B), the Penalty Offense Authority, to increase deterrence, reduce 

gamesmanship around Section 13(b), and promote market-wide compliance. See Rohit Chopra & Samuel A.A. Levine, The Case 

for Resurrecting the FTC Act’s Penalty Offense Authority (Oct. 29, 2020), 

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3721256. 32 Forty years ago, the Commission issued an order in Cliffdale Associates finding that it was deceptive under Section 5 to portray 

endorsements as objective when in fact they were written by the seller’s paid agents. See In the Matter of Cliffdale Assocs., Inc., 

103 F.T.C. 110 (1984). The Commission could provide notice of this and other relevant orders to market participants, which 

would expose them to stiff civil penalties if they engage in fake review fraud or similar disinformation tactics. 

 

• Restate Existing Legal Precedent into Rules: The FTC is authorized to prohibit prevalent 

unfair or deceptive practices through rules, and to seek civil penalties against violators.28 

These rules need not impose any substantive obligation on market participants, and can 

instead simply restate existing law. For example, the FTC is currently undertaking a 

rulemaking to consider codifying its existing Made in USA guidance, which would help 

increase accountability for those who abuse the label.29 In this area, the Commission can 

codify basic tenets of the FTC Endorsement Guides – in particular, the requirement that 

endorsers disclose material connections to sellers – into a rule. This would impose zero 

regulatory burden on market participants, while ensuring real accountability for those who 

cheat.30 

• Designate Specific Misconduct as Penalty Offenses: The Commission need not wait to 

issue a rule to seek civil penalties against fake review fraudsters and other wrongdoers. The 

Commission has authority under Section 5(m)(1)(B) of the FTC Act to seek penalties against 

parties who engage in conduct known to have been previously condemned by the 

Commission.31 The practice of endorsing products without disclosing material connections 

was condemned decades ago,32 and the Commission can act almost immediately to trigger 

substantial penalties against the worst violators. 

Conclusion 

With disinformation pervading the digital world and fake reviews polluting online marketplaces, 

the Commission’s decision to finalize this flawed settlement is more than a missed opportunity. 

It is a serious setback for online shoppers, honest sellers, and the Commission’s credibility. 

Rare is there a case as egregious as this one, with a whistleblower accusing a company of fraud 

in a public Reddit post. Despite clear authority to send a strong message through this case, the 

Commission is instead sending the message that there are no real consequences for online 

disinformation and fake review scams. This does not protect consumers. For these reasons, I 

respectfully dissent. 

8