Real Estate Gurus, Fake Testimonials, and the Law

WASHINGTON - DECEMBER 09:  John Mackey, CEO of...
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If I said “Whole Foods” to you, would you know how that company is related to real estate? I wouldn’t have either but I read Hallie Mummert’s Editor’s Notes in this month’s Target Marketing Magazine.

It seems their CEO, John Mackey, was exposed for using a pseudonym to post negative comments about rival organic grocer Wild Oats. He did his dastardly deed on Yahoo Finance. As it turns out, Whole Foods eventually bought Wild Oats. A turn of events that some see as the CEO using unethical and possibly illegal behavior to gain an advantage in the purchase process.

Raised Eyebrows

Not only did the financial markets raise their eyebrows over his postings but so did the FTC. The FTC not only raised their eyebrows but they are now considering reviewing, with the probability of revising, their advertising guidelines that relate to endorsements and testimonials. They might even call it The Mackey Rule if I know anything about their rationale.

As we all may know, considering is a heck of a lot different than implementing. However, when an agency like the FTC says considering, you can believe a lot of people will be paying close attention to exactly what they are considering. They will both pay attention and adjust their actions in accordance with those considerations.

Some of what they are considering involves social media marketing with a particular attention on the payment or influencing of bloggers and testimonials on websites. It seems the main issue is transparency of the relationship between a writer and the product or service being reviewed.

How About Your Website

If I am correct, and I know I am, many of us have websites that promote products and/or services. Many of us also have testimonials. If I am correct, the FTC wants to make sure the writer of the testimonial is for real and has actually done what they say they have done as a result of your product.

One particular real esate guru comes to mind. I subscribed to his newsletter because of the testimonials on his page plus the you can unsubscribe guarantee. However, once on his mailing list, I couldn’t get off although his emails have an unsubscribe link. It took me 6 months plus a phone call to be removed from his advertising disguised as a newsletter.

I still can’t get his office to stop calling me. About every three months someone from his office calls and wants me to enroll in his short sale course. Each caller promises to remove me from the list. I guess I’ll go to my grave asking to be removed.

Here’s the point to my woes. If this guy does business like this, would anyone suppose his testimonials are all on the up and up? They certainly may be, but I doubt it.

This is the kind of non-transparent behavior the FTC will look at. I don’t know that for sure but I would bet people with a high profile, like this guru, will automatically come under scrutiny. The FTC usually hits the shiniest stars – people who charge a blue fortune and make outlandish promises – in the field so they get maximum impact for minimum expenditure.

User-generated Content

Mummert made an interesting point that will surely serve as fire under the FTC’s tail to monitor on site comments and endorsements. She wrote that 92 percent of consumers report being influenced by user-generated product reviews with 65 percent saying social media helped guide their purchasing decisions. Those are huge numbers of people.

No one really likes to see a rise in Mackey-like subterfuge. That kind of behavior only ruins a good thing according to me. On the other hand, as you might expect, the distinction between unbiased editorial and “cloaked” advertising will be clear for bloggers, marketers and, yes, consumers.

If that isn’t a win-win-win situation, I don’t know what is.

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  1. Tom – I’ve NEVER believed any testimonials I’ve found online, as most are anonymous. That’s one of the reasons our Real Estate Guru, Book & Course Reviews and Discussions forum is so popular.

    Additionally our members are fantastic at calling out shills, so any guru shilling for themselves or using others to do so, gets called out and looks worse for wear.

    As for your issue with the particular guru, it would be great if you revealed who he/she is so we can all avoid them.

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