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Astroturfing: Fake Online Reviews Result in $1.25 Million Penalty

Astroturfing is the practice of circulating a fake endorsement via the Internet that appears to originate from an individual consumer, but was in fact created or sponsored by the subject business. Contrary to the expectations of some, the practice is illegal.

In particular, it is considered a deceptive marketing practice that may violate the civil and/or crimimal prohibitions in the Canadian Competition Act against materially false or misleading representations. See sections 52 and 74.01(1)(a).

These are not minor offences. For a first offence, the maximum civil penalty for a corporation is $10 million. A criminal conviction may attract further monetary penalties in the millions of dollars AND a prison sentence for the responsible officers and directors of the corporation.

Recently, the Competition Bureau has started to invite complaints from consumers who believe that they may have been deceived by such fake endorsements. On October 14, 2015, it  also announced that Bell Canada had agreed to pay $1.25 million penalty after certain employees were encouraged to post reviews and ratings of Bell apps on the iTunes App Store and the Google Play Store in November 2014 and it was determined that this activity temporarily affected the overall rating for the apps.

Consequently, a business would be well advised to develop a written internal policy addressing such activity by its employees and subcontractors. In particular, a business should NOT to direct, encourage or incentivize its employees or subcontractors to either:

a. post endorsements via the Internet without disclosing their identity and relationship with the business; or

b. otherwise participate in any anonymous ranking or rating of the business or any of its products via social media.