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What to Do About Consumer Deception on the Internet?

Posted by on in Internet Privacy
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It was 23 years ago when the cartoon dog in the New Yorker made a now-famous observation about online identity. The question of how to winnow truth from fiction, goodwill and bad motives, still looms over the World Wide Web.


An upcoming article in the NYU Journal of Law & Business focuses on the consumer landscape: the arena of online reviews, product endorsements and thorny marketplace relationships.


DePaul University law professor Max N. Helveston, who teaches consumer protection and insurance law, argues that our legal and enforcement regimes have yet to catch up to cyberspace chicanery. In a piece titled “Regulating Digital Markets,” he writes:


"The growth of the internet and online applications has increased individuals’ reliance on customer reviews and other reputational information. This has created large economic incentives for firms to try and influence how they are portrayed on the websites and applications that review their products. These incentives have started to manifest in a multitude of different ways—firms posting duplicitous reviews or contracting with third-parties to do the same, review-hosting companies allegedly extorting money from reviewed companies, etc. Federal and state regulators have been slow to react to these developments, permitting the corruption of reputational information and allowing businesses to undermine a force that would punish exploitative business practices"


Mr. Helveston notes that some law-enforcement figures have been more aggressive in policing consumer-protection laws already on the books, giving a hat-tip to New York Attorney General Eric Schneiderman and his “Operation Clean Turf.” The state’s investigation into the “reputation management industry” led to an out-of-court settlement with more than a dozen search-engine optimization firms that the Democratic state attorney general said helped contribute to a deluge of fake consumer reviews.


But the law is unsettled in the area, and courts have gingerly stepped into the space, showing some reluctance to embrace plaintiffs’ consumer-protection suits targeting larger Internet players.


The professor suggests a raft of new laws and regulations:


"Revised rules could require that companies that host the product reviews of third parties disclose any pecuniary relationships that they have with the businesses that are reviewed. Such disclosures could be made available to the public on a governmental regulatory body’s website"


He also recommends legislation “proscribing individuals from posting reviews” that contain “disingenuous and deceptive” information. “Existing federal and state laws could be interpreted as prohibiting this behavior,” he writes, but “their application to online reviews is not clear.”


And he says lawmakers would be wise to consider regulations “prohibiting companies and their employees from posting reviews of their own business, posting negative reviews about competitors, or offering pecuniary incentives to third parties to induce them to do these things.”


Such laws and rules would empower class-action lawyers with a whole new arsenal of potential claims, a scenario that many in the business world and free-market thinkers would urge avoiding.


Mr. Helveston, though, is skeptical that such “new threats to consumer welfare” will vanish without help from regulators or lawmakers.

Source : http://blogs.wsj.com/law/2016/08/02/what-to-do-about-consumer-deception-on-the-internet/

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