Fine Line Between Advertising and Some Dealer Reviews

Nearly 75% of shoppers will read and react to online reviews. For dealers, not having reviews is no longer an option.

Dealers need positive reviews. They must work to get them in various ways. Sometimes, this can involve bad practices, including partnering with third-party firms that charge to post reviews.

Such companies for a fee take what is supposedly a real review by a real customer and post it on websites such as Google and Yelp.

The process starts with dealership customers being asked to fill out a pre-stamped post card containing a survey. A company, not the customers, uploads and posts information from the postcards.

This setup poses two problems.

First, it potentially could get a dealer in trouble with the Federal Trade Commission and state agencies. Second, paid-for “on-behalf-of” reviews are against every major hosting platform’s terms of service. Google has updated its review restrictions. 

Even if you want to defend the legality of the practice, all reviews that violate a review platform’s terms of service are subject to removal, and the platform as punishment may bar a dealership’s access.

The FTC considers any review that involves money changing hands as a paid endorsement. When that happens, it’s advertising, not a review.

The FTC has cracked down since 2009 on things like blogger payola, paid reviews and bogus reviews. Expect this to continue. The FTC certainly doesn’t hold back on car dealers, so they need to protect themselves from the legal risks of reviews as advertising.

The FTC deems it an endorsement if a film critic’s review is used in an advertisement for a movie. But if the review is paid for, it is considered advertising. It is arguable that a car-buyer’s review, posted “on behalf of the buyer” by a third-party firm, is merely an endorsement, because money changed hands, even though it didn’t go to the reviewer.

As such, a dealer would need to reveal the setup as part of the review. But if a dealer did that, it would be telling the review platform its terms of service provisions were being violated

State laws on dealer advertising should not be ignored, either. This year, the Florida Attorney General’s office sued a Jacksonville, FL, car dealership for allegedly violating state consumer-protection law, including the posting of questionable reviews.

The on-behalf-of system creates the potential for a lot of skewing and downright fraud, besides the problem with violating platform providers’ terms of service.

Finally, there is a risk of a dealer and review company getting involved in a legal mess over who got paid for what.

Of course, dealers want good reviews, and lots of them. But to stay out of trouble, they should get reviews from real customers posted by them.

More and more, dealer market share depends on consumer ratings. Great customer service combined with compliant review practices will increase car sales.

Keith Shetterly is an automotive consultant and trainer who was e-commerce director for a large dealership group. He can be reached at [email protected].

Jim Radogna is the founder and president of DealerComplianceConsultants.com, a national resources and training firm. He has spent more than 15 years in dealership management. He can be reached at   [email protected].