NAD Concerns About Trustpilot Ratings Methodology
In 2019 and in response to a competitor challenge, the National Advertising Division ruled on the “#1 Rated” claim made by TaxSlayer LLC in its promotional messages. In doing so, the NAD recommended that TaxSlayer discontinue the unsubstantiated representation.
More specifically, the claims at issue included “Slay your taxes. So you can enjoy your refund. Maximize your refund with TaxSlayer. #1 rated on Trustpilot” and “#1 Rated in the Tax Prep Software Category on Trustpilot. Start free today!”
Theer was a disclosure that stated that the foregoing claims were “based on more than 2300 verified customer reviews on Trustpilot. TaxSlayer has 1500+ 5-star reviews, and 84% of TaxSlayer customers rate TaxSlayer Great or Excellent on Trustpilot. Learn more at trustpilot.com/review/taxslayer.”
The NAD opined that for “#1 Rated” claims, advertisers should compare themselves with at least 85% of the applicable marketplace, and the consumers surveyed should represent a broad base of customers that used the product.
According to the NAD, TaxSlayer did not satisfy such requirements because the population of online reviews that created the basis for Trustpilot’s score allegedly failed to represent the general opinion of tax preparation software consumers across the United States. The NAD also rejected TaxSlayer’s argument that a consumer could simply visit the Trustpilot website to clarify any confusion about its ranking.
“Consumers should not have to search to learn more about the limitations on an advertising claim,” said the NAD. “Here, while the claim informs consumers that it is limited to companies in the tax prep software category on a certain website, it does not inform them that this ranking is not based on a representative sample of tax prep software consumers.”
By way of background and according then to the NAD, to a large extent Trustpilot collects reviews from consumers with relationships with companies that possess business relationships with Trustpilot. In 2019, the NAD said that the market leader in the tax prep software category had no relationship with Trustpilot and had received only 15 reviews on the website, as compared with the over 2,500 reviews for TaxSlayer.
At the time, the NAD also delved into other purported issues regarding the reliability of some Trustpilot reviews. According the NAD in 2019, the website lacked mechanisms to verify that reviewers were bona fide consumers of the companies reviewed and failed to utilize preventative measures regarding multiple submissions.
The NAD also stated that there was insufficient evidence that the reviews represented 85% of the market of tax software providers, and noted that because Trustpilot’s ratings were based not simply on customer reviews, but on the site’s proprietary “Trustscore,” the various factors and weight attributable thereto was ambiguous.
“Consequently, NAD determined that the consumer review data underlying the Trustpilot rankings was insufficient to support the advertiser’s ‘#1 rated’ claims.” As such, the NAD recommended that TaxSlayer discontinue the challenged claims.
The NAD recently addressed, once again, why advertisers cannot just assume that it can rely upon third-party rankings.
This time, the NAD recommended that CreditAssociates cease representing that it was “America’s #1 Debt Relief Company” based on Trustpilot reviews.
The NAD expressed concerns about Trustpilot’s ratings methodology, some of which are similar to those expressed in the TaxSlayer matter and some of which are different due to modifications made to the Trustpilot platform.
According to the NAD, Trustpilot rewards companies that solicit reviews and states that “businesses that regularly invite their customers to write reviews tend to have a higher TrustScore than businesses that do not.” The NAD expressed concern that “companies that do not actively solicit reviews in accordance with Trustpilot’s requirements and receive a certain number of reviews will not even be considered as part of the universe of companies against which Credit Associates is compared.”
Also according to the NAD, businesses with a free Trustpilot account can solicit up to 100 reviews per month. However, businesses with a paid account can solicit 500 or more, depending on the chosen plan. The NAD stated that “in essence, the ranking at issue is influenced by a company’s Trustpilot subscription which affords more opportunities to solicit reviews than companies which do not have a paid subscription.”
As a result, according to NAD, “Credit Associates can only be confident that its own reviews represent the opinions of its own consumers as the same cannot be said about the companies against which it is being compared. Consumers can be misled because they are not aware of the lack of representativeness of reviews, a fatal flaw given the strength of the challenged claim.”
The NAD recommended that Credit Associates cease the #1 claim. However, the NAD did not appear to have an issue with a representation that the company had achieved a “4.9 out of 5 based on 8,641 reviews” on Trustpilot. The foregoing suggests that advertisers may be permitted to make claims about their own products based upon Trustpilot rankins, without comparison to competitors. However, both the TaxSlayer and Credit Associates matters make reasonably clear that comparative claims based upon such ratings may be problematic.
Takeaway: Top ranking by a review site (e.g., Truspilot) does not necessarily permit an advertiser to lawfully represent that it is “number 1.” Advertisers should be careful when relying upon consumer reviews and rankings for advertising claims. The NAD, Federal Trade Commission and state attorneys general often investigate and initiate enforcement actions against those making unsubstantiated ranking and review claims, so much so that the FTC has proposed updates to its Guides Concerning the Use of Endorsements and Testimonials in Advertising that would come with stricter controls and potential civil monetary penalties.
Richard B. Newman is a leading FTC defense attorney at Hinch Newman LLP. He represents individuals and business in Federal Trade Commission and state attorneys general investigations. Follow FTC defense attorney Richard Newman on National Law Review.
Informational purposes only. Not legal advice. May be considered attorney advertising.
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