As detailed in the FTC’s complaint, Texas-based Sunday Riley Skincare sells a variety of cosmetic products, including Luna Sleeping Night Oil, Good Genes All-In-One Lactic Acid Treatment, Blue Moon Tranquility Cleansing Balm, Start Over Active Eye Gel Cream, Bionic Anti-Aging Cream, and C.E.O. Rapid Flash Brightening Serum. The company sells its cosmetics at Sephora, a multinational chain of personal care and beauty stores, and on the Sephora.com website. The products sell for between $22 and $158 each.
Sephora allows consumers to leave customer reviews of products sold on its website, providing a forum for sharing authentic feedback about the products it sells. In its complaint, the FTC alleges that between November 2015 and August 2017, Sunday Riley Skincare managers, including Ms. Riley herself, posted reviews of their branded products on the Sephora site 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 that Ms. Riley 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 Ms. 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. 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.