Amazon seller awarded $9.5m over fake reviews, unfair competition
Disclaimer: I testified in this case as an expert witness on behalf of the plaintiff – so I’m obligated to strictly limit my post to publicly available information. It’s boring and straight to the point, but contains many links to sources with much more detailed information.
First – what is ReviewMeta?
In an opinion written last month, a federal judge ordered an Amazon seller to pay a competitor $9,551,232 plus attorneys fees for unfair competition under the Lanham Act.
The case began on October, 28th, 2013, when a seller of vitamins on Amazon (Vitamins Online, Inc.) filed a lawsuit against another seller of vitamins on Amazon (Heartwise, Inc d/b/a Naturewise). Yes, this case was going on for SEVEN YEARS.
The plaintiff alleged unfair competition and false advertising – specifically claiming that the defendant manipulated Amazon’s customer reviews and had misrepresented the content and characteristics of their vitamins.
The court concluded that the defendant had in fact falsely advertised their products, which likely led to consumers preferring the defendant’s products over the plaintiff’s.
This is the part where I testified as an expert witness. My favorite quote is in paragraph #67:
Dr. McAuley authored a joint report with Vitamins Online’s other statistics and review manipulation expert, Thomas “Tommy” Noonan (“Noonan”), Tr. 1401-02. Noonan was qualified as an expert, Tr. 1515-28, 1531-32, and his testimony was credible.
The court found that the defendant manipulated the product reviews – namely by offering free products in exchange for reviews. The court also found that this type of review manipulation resulted in the deception of customers, because such review manipulation was material to customers.
Ingredient and Label Claims
The court found there were numerous problems with the label and ingredient claims on the defendant’s products. The court found:
- Product testing demonstrated that the products contained far less of several advertised ingredients.
- The advertised “vegetarian capsules” contained protein and gelatin from animal sources.
- Products advertised that they were 100% pure and had no fillers, binders, or artificial ingredients, but testing demonstrated that certain lots contained excipients, binders, fillers, and/or artificial ingredients.
Defendant files chapter 11 bankruptcy
After the court ordered the defendant to pay $9.5m in damages, the defendant filed for chapter 11 bankruptcy in the Central District of California. Per their filing, they actually earned $22m in revenue in 2020 alone.
It’s unknown what will happen next. The plaintiff may have difficulties collecting on the judgement due to this bankruptcy.
Remedy for consumers?
Nope. The court found that the defendant lied and misled consumers, yet those consumers aren’t going to see a dime, nor will they be notified of the findings. It’s likely that millions of people bought these supplements, but most will be kept in the dark about what they were actually purchasing and putting in their bodies.
The court also found that the Amazon reviews were manipulated. Amazon enabled this to happen and continues to display these reviews and sell these products.
The result of this 7-year court battle seems to only remedy one competitor – not the millions of consumers.
However, It’s also worth mentioning that the defendant was named in a class action lawsuit in June of 2020 for false advertising; fraud, deceit, and/or misrepresentation; unfair business practices; and unjust enrichment. It’s unclear how the chapter 11 filing will affect this case.
The case focused on four products – which are still available on the Amazon marketplace. Check out the ReviewMeta reports for each below: (Be sure to check the number of deleted reviews for each of the listings).