Excerpt
LendEDU was fined for promoting products in exchange for a fee and posting fake positive reviews on its website.
Our analysis
The Federal Trade Commission (FTC) finalized a settlement with the Delaware-based comparison shopping website, LendEDU, over allegations that it engaged in deceptive actions.
-LendEDU was accused of promoting deceptive rankings of financial products in exchange for a fee and posting fake positive reviews on its website. The agency's administrative complaint revealed that LendEDU created a false impression of providing objective product information while actually offering higher rankings and ratings to companies that paid for placement.
-The FTC further alleged that LendEDU falsely claimed that compensation from advertisers did not affect the information on its website, and it touted fake positive reviews.
These actions were in violation of the Federal Trade Commission Act, 15 U.S.C. § 45, and constituted deceptive practices, particularly the use of fake social proof.
Outcome
In the case outcome, the final order resolving the FTC's charges mandates that LendEDU and its operators are prohibited from misrepresenting the objectivity of product rankings, the impact of compensation on content, and material connections or endorsements with companies. Additionally, LendEDU is obligated to pay a fine of $350,000.
Parties
Federal Trade Commission and LendEDU
Case number
Docket No. C-4719
Decision
Related deceptive patterns
The fake social proof deceptive pattern creates an illusion of popularity and credibility by presenting users with falsified or exaggerated endorsements, such as reviews, testimonials, or activity messages. This manipulation preys on the social proof cognitive bias, in which which individuals are likely to conform to the behaviour of others. It is a shortcut that allows people to avoid the hard work of carrying out a critical evaluation of their own. By using the fake social proof deceptive pattern, providers can trick users into making a purchase or engaging with their offerings.
Related laws
Prohibits deceptive acts or practices that misrepresent or omit material facts.