Sunday Riley Settles with FTC

The Federal Trade Commission (FTC) has halted  deceptive online marketing tactics of a cosmetics firm that allegedly used fake product reviews posted by its employees on a well-known retail website.

Sunday Riley Modern Skincare, LLC (Sunday Riley Skincare) and its CEO, Sunday Riley, have agreed to settle an FTC complaint charging them with misleading consumers by posting fake reviews of the company’s products on a major retailer’s website, at the CEO’s direction, and by failing to disclose that the reviewers were company employees.

“Dishonesty in the online marketplace harms shoppers, as well as firms that play fair and square,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. “Posting fake reviews on shopping websites or buying and selling fake followers is illegal. It undermines the marketplace, and the FTC will not tolerate it.”

In its complaint, the FTC alleges that between November 2015 and August 2017, Sunday Riley Skincare managers, including Riley herself, posted reviews of their branded products on  Sephora’s website using fake accounts created to hide their identity, and requested that other Sunday Riley Skincare employees do the same thing.

The FTC alleges that after Sephora removed fake employee-written reviews, Sunday Riley Skincare employees suspected this was because Sephora recognized the reviews as coming from their IP addresses. Sunday Riley Skincare then allegedly obtained, according to one of the company’s managers, “an Express VPN account [to] . . . allow us to hide our IP address and location when we write reviews.” A VPN (virtual private network) lets users access the internet privately, by using separate servers to hide their online activity.

The FTC complaint also quotes from a July 2016 email in which the CEO wrote to her staff directing each of them to “create three accounts on Sephora.com, registered as . . . different identities.” The email included step-by-step instructions for setting up new personas and using a VPN to hide their identities, and directed employees to focus on certain products, to “[a]lways leave 5 stars” when reviewing Sunday Riley Skincare products, and to “dislike” negative reviews. “If you see a negative review – DISLIKE it,” Ms. Riley wrote, “After enough dislikes, it is removed. This directly translates into sales!!”

The FTC’s complaint charges Sunday Riley Skincare and Riley with two violations of the FTC Act: 1) making false or misleading claims that the fake reviews reflected the opinions of ordinary users of the products; and 2) deceptively failing to disclose that the reviews were written by Ms. Riley or her employees.

The proposed administrative order settling the FTC’s allegations against Sunday Riley Skincare and Ms. Riley is intended to ensure the respondents do not engage in similar allegedly illegal conduct in the future, said FTC. First, the order prohibits the respondents, in connection with the sale of any product, from misrepresenting the status of any endorser or person reviewing the product. This includes misrepresentations that the endorser or reviewer is an independent or ordinary user of the product.
Next, the order prohibits the respondents from making any representation about any consumer or other product endorser without clearly and conspicuously disclosing any unexpected material connection between the endorser and any respondent or entity affiliated with the product. Such disclosures must be made in close proximity to the product review or endorsement.

In addition, the order requires the respondents to instruct their employees and agents about their responsibilities to clearly and conspicuously disclose their connections to the respondents’ products in any endorsements.

The Commission vote approving the administrative complaint and proposed consent order in the Sunday Riley matter was 3-2, with Commissioners Rohit Chopra and Rebecca Kelly Slaughter voting no.

Commissioner Chopra issued a separate statement, in which he was joined by Commissioner Slaughter. 
The public may submit comments on the proposed consent order through Regulations.gov, which will be available to accept comments starting Friday, October 25, 2019. Prior to publication in the Federal Register, the public may email comments to [email protected].

Comments will be accepted for 30 days from publication in the Federal Register, after which the Commission will decide whether to make the proposed consent order final. Comments received will be posted on Regulations.gov.