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HB Legal: Employment Law

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With increasing globalization and new technologies abound, employers need to stay up to date on the latest laws regarding hiring and the workforce. In this special section, we explore some frequently asked questions in the workplace and the law.

Online Review Pitfalls

Q: I want to attract positive online reviews for my business.  Are there legal pitfalls I should be aware of?

A: Today’s consumer regularly consults online review websites (like Yelp and Citysearch), blogs, and discussion boards before making purchases.  A 2009 Nielsen survey found that 70% of those surveyed said they trust consumer opinions posted online.  Knowing the power of good online reviews, some businesses solicit endorsements of their products or services from social media personalities or well-known bloggers.  Although that can be an effective marketing strategy, businesses should follow two guidelines to stay out of legal trouble.

1. Be transparent. 

Federal Trade Commission guidelines require reviewers to disclose a material connection with a business whose products or services they are reviewing or else the business could face penalties.  The business could also be sued for violating state and federal consumer protection laws.  A “material connection” exists when the reviewer receives some kind of compensation from the business, even if not directly in exchange for the review.  For example, an employee must disclose her employment status if she endorses her company’s services on her Facebook page.  As another example, suppose a business provides a blogger with a product to review on his blog, free of charge.  The blogger must clearly and conspicuously disclose that he received the product for free.

                  Elijah Yip, Esq.

These practices will help you comply with the disclosure rule:

  • Notify anyone who endorses your products or services, whether it be a third-party reviewer or an employee, that they must make a disclosure if they receive any compensation from you. 
  • Monitor online review and social media websites to verify compliance with your disclosure policy.

2. Be authentic.

Resist the temptation to boost your business with fake online reviews.   Trying to generate artificial buzz for your business – a practice known as “astroturfing” (i.e., creating the false appearance of grass-roots support) – leads to trouble.  In 2009, the New York Attorney General settled claims against a company for allegedly posting anonymous favorable customer reviews on third-party websites.  The settlement required the company to pay $300,000 in penalties and costs.  Fabricating endorsements is not only illegal, but can backfire and result in a public relations disaster.

In short, be honest and play fair – it’s good for business.

Elijah Yip is a litigation partner at Cades Schutte LLP.  He is the chair of the firm’s Digital Media and Internet Law practice group.


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Honolulu, HI 96813

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