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Retailer Rebuked by FTC for Posting Fake Online Reviews

But two commissioners say the agency is going too easy on the firm.

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Retailers of all types want a flattering online presence, but a new Federal Trade Commission case serves as a warning: Fake reviews don’t pay.

The FTC has halted what it calls the “deceptive online marketing tactics” of a company that allegedly used fake product reviews posted by its employees on a well-known retail website.

Cosmetics firm Sunday Riley Modern Skincare LLC and its CEO, Sunday Riley, have agreed to settle an FTC complaint, according to a press release from the agency. They were alleged to have posted fake reviews to Sephora.

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“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. “… It undermines the marketplace, and the FTC will not tolerate it.”

Wired.com noted, however that the settlement “did not require the company to admit fault, notify customers of the fraud, or turn over any ill-gotten gains.”

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As such, Commissioner Rohit Chopra, who along with Commissioner Rebecca Slaughter dissented from the FTC decision, stated: “Dishonest firms may come to conclude that posting fake reviews is a viable strategy, given the proposed outcome here. Honest firms, who are the biggest victims of this fraud, may be wondering if they are losing out by following the law. Consumers may come to lack confidence that reviews are truthful.”

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, according to the FTC.

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, the FTC explained. In its complaint, the agency alleged that between November 2015 and August 2017, Sunday Riley Skincare managers, including 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 alleged 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 using separate servers to hide their online activity.

The FTC complaint also quoted from a July 2016 email that 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,” Riley wrote, adding: “After enough dislikes, it is removed. This directly translates into sales!!”

The FTC’s complaint charged Sunday Riley Skincare and the CEO 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 Riley or her employees.

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The proposed administrative order settling the FTC’s allegations against Sunday Riley Skincare and Riley is intended to ensure the respondents do not engage in similar allegedly illegal conduct in the future, according to the release. 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,” according to the agency. 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 Chopra and Slaughter voting no.

The public may submit comments on the proposed consent order through Regulations.gov. The comment period opened on Oct. 25. Comments will be accepted for 30 days from publication in the Federal Register, after which the agency will decide whether to make the proposed consent order final. Comments received will be posted on Regulations.gov.

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More than 70 Chinese Exhibitors Cancel Their Booths at Global Pet Expo

Instead of sending U.S.-based representatives, the companies have opted out of the annual show.

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According to a report from John Gibbons, AKA the Pet Business Professor, more than 70 Chinese exhibitors have cancelled their booths at Global Pet Expo due to the travel restrictions relating to coronavirus.

Since we first shared a statement on the issue from Global Pet Expo Officials, the show has updated its website with the following:

“With less than 14 days until Global Pet Expo, we are gearing up for another amazing event! Currently, we have more than 1,000 companies from 28 countries around the world planning to exhibit. Buyer registration is strong and we’re expecting over 7,000 buyers from 80 countries. Two weeks from today, Global Pet Expo opens its doors and we can’t wait to welcome you to our world.

As we eagerly prepare for the Show, we are confident that Global Pet Expo will deliver a successful business experience for all participants. However, we want to take a moment to address how the Coronavirus (COVID-19) will impact some of our exhibitors. We have been in contact with exhibitors from China. The vast majority have notified us that they will not be exhibiting and will not have outside representation available to take their place at this year’s Show. Moreover, any foreign nationals that have visited China within the last 14 days are barred from entering the United States. Therefore, these attendees will not be able to participate in this year’s Global Pet Expo.

The health and safety of all Show participants are paramount. The Global Pet Expo management team is working closely with the Orange County Convention Center and surrounding hotels to stay apprised of developing precautionary measures to further reduce potential health risks at the Show. Additionally, we will continue to follow the guidance of the World Health Organization (WHO) and Centers for Disease Control (CDC) and Prevention, and will provide emerging information accordingly.

Over the next two weeks leading up to the Show, we will continue to keep you updated as new information becomes available. We look forward to seeing you in Orlando!”

We’ll keep an eye on the situation, and you can also look for updates on the Global Pet Expo website.

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C.J. Foods to Acquire American Nutrition

ANI operates five manufacturing facilities throughout the US.

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BERN, KS — C.J. Foods Inc., a custom manufacturer of specialty dry pet food, announced an agreement to acquire American Nutrition Inc., a supplier of dry, canned and baked pet food and treats.

This transaction creates “the largest independent manufacturer of super premium pet food in the country, producing a total of one billion pounds of pet food annually,” according to a press release. It is expected to close by April.

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Financial terms of the deal were not disclosed.

The acquisition of ANI will enable CJF to offer a full portfolio of pet food and treats with national and international distribution, according to the release. David McLain, CEO, C.J. Foods, will join the board of directors. Tod Morgan remains chairman of the board and Bill Behnken, current president and CEO, ANI, will serve as board member.

“This acquisition creates the leading manufacturer of super premium pet food with a national footprint, focused on producing and delivering the highest quality products to our customers,” said Morgan.

C.J. Foods “has a rich 35-year history in super premium pet food manufacturing with a wide range of international capabilities serving the leading super premium brand owners and retailers,” acccording to the release.

ANI operates five manufacturing facilities throughout the U.S.

“C.J. Foods and ANI are two world-class manufacturers with complementary capabilities that make the combination a win for our customers,” said Behnken. “It truly enhances our ability to provide higher levels of innovation to meet the ever-evolving opportunities in premium pet nutrition.”

“CJF is thrilled to be moving forward with ANI to strengthen our customer value proposition with a continued singular focus on innovation and food safety, leading the industry with on-trend products,” said McLain.

C.J. Foods is a portfolio company of J. H. Whitney Capital Partners, a Connecticut based private equity firm that has owned C.J. Foods since 2014 and acquired Lortscher’s Animal Nutrition (LANI) in 2018.

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Video: Poodle Wins ‘Best in Show’ at Westminster

Siba took first place from among a field of 21 Best of Breed winners.

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(PRESS RELEASE) NEW YORK – The Standard Poodle “Siba” won Best in Show at the 144th Annual Westminster Kennel Club Dog Show under Judge Robert Slay at Madison Square Garden on Feb. 11.

Siba, a 4-year-old female, officially known as GCHP Stone Run Afternoon Tea, was handled by Chrystal Murray-Clas and is owned by Connie Unger and William Lee of Northampton, Pennsylvania.

On Monday night, Siba won the Non-Sporting Group in a field of 21 Best of Breed winners. Westminster reached its conformation entry limit of 2,500 dogs, with three days of Best of Breed competition Feb. 9-11 held at Pier 94 and Group and Best in Show competition held at Madison Square Garden.

“There is no greater prize in the sport of dogs than winning Best in Show at America’s Dog Show,” said Westminster Kennel Club Director of Communications Gail Miller Bisher. “Congratulations to Siba’s handler, owners and breeder for this most prestigious win among a magnificent Best in Show lineup of quality dogs.”

The evening Group finals, including Best in Show, were televised live on FS1. For full Westminster Kennel Club Dog Show results and video visit www.westminsterkennelclub.org. All events are presented by Purina Pro Plan.

Watch the video:

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