Under a proposed Federal Trade Commission (FTC) rule, posting fake reviews will be illegal. Buying social media followers will be too. And if a company pays someone to review a business positively—or negatively—that could also bring down the hammer.

Like its recently released guidance on influencer marketing, the FTC’s new rule on reviews and testimonials mostly builds on existing policies requiring honesty and transparency. However, it is being codified as a “rule,” which is stronger than guidance and more likely to bring enforcement action. It would prohibit:

Selling or obtaining fake consumer reviews and testimonials. The proposal makes it illegal for businesses to write or post consumer reviews or testimonials by someone who doesn’t exist, or didn’t have experience with the product or service, or misrepresents their experiences. It also outlaws procuring or posting reviews that a business knows (or should know) are fake.

Review hijacking. Businesses cannot use or repurpose a consumer review written for one product to make it appear to have been written for a different product. (The FTC recently took action against a purported review hijacker.)

Buying positive or negative reviews. Businesses will not be allowed to provide incentives to attract consumer reviews expressing a particular sentiment, whether positive or negative.

Insider reviews and consumer testimonials. The proposed rule would prohibit a company’s officers and managers from writing or disseminating reviews or testimonials about its products or services without clearly disclosing their relationship. It also would bar certain solicitations from companies of reviews from employees or their relatives.

Company-controlled review websites. Businesses cannot create or control a website that claims to provide independent opinions about products or services that includes its own products or services.

Review suppression. Businesses will be prohibited from using unjustified legal threats, intimidation, or false accusations to prevent or remove a negative consumer review. The proposed rule also would bar a business from claiming that the reviews on its website represent all reviews submitted, if negative comments have been suppressed.

Buying or selling fake social media followers or views.

The FTC voted unanimously to approve the proposed rule. Its notice for public comment can be seen here. After public comments are reviewed, the commission will issue a final rule.

(Photo: Getty Images)

“Amazon used manipulative, coercive, or deceptive user interface designs known as ‘dark patterns’ to trick consumers into enrolling in automatically renewing Prime subscriptions,” says an FTC statement.

The heavily redacted complaint, filed June 21 in the Western District of Washington federal court, charges that Amazon “knowingly complicated” the cancellation process for subscribers of the $14.99-a-month service.

According to the FTC, customers had to complete multiple steps to terminate their membership: First, they had to locate the cancellation option, which wasn’t easy; then they were redirected to multiple pages, which presented several offers to keep Prime at a discounted price or the choice not to cancel. Only after clicking through these pages could they finally end their membership.

“The primary purpose of the Prime cancellation process was not to enable subscribers to cancel, but rather to thwart them,” according to the complaint. “Fittingly, Amazon named that process ‘Iliad,’ which refers to Homer’s epic about the long, arduous Trojan War.”

In some cases, the FTC alleges, consumers were misled into joining Prime by clicking certain buttons, “which did not clearly state that in choosing that option they were also agreeing to join Prime for a recurring subscription.”

The FTC says Amazon also engaged in “sneaking” —a technique where a design element deliberately hides or disguises relevant information.

“Amazon uses sneaking by failing to clearly and conspicuously disclose Prime’s terms and conditions during its enrollment checkout flow, including its price and auto-renew attribute,” the lawsuit says. “Amazon also employs sneaking by failing to show Prime’s price or its auto-renewal feature in the consumer’s cart.”

The FTC notes that Amazon “substantially revamped” the Prime cancellation process prior to the complaint’s filing. “However, the cancellation process still contains problematic elements,” it says. “Amazon still requires five clicks on desktop and six on mobile for consumers to cancel…. And both flows still require consumers to proceed through extraneous information unnecessary to the cancellation process.”

Amazon’s actions violated the FTC Act and the Restore Online Shoppers’ Confidence Act, the FTC says in the suit. It seeks an injunction against any future violations and unspecified damages.

In a response, Amazon called the FTC’s claims “false on the facts and the law.”

“We make it clear and simple for customers to both sign up for and to cancel their Prime membership,” the company said. “As with all our products and services, we continually listen to customer feedback and look for ways to improve the customer experience.”

Amazon’s statement said it was “concerning” that the FTC filed the lawsuit without notice while the two sides were in the midst of discussions.

(Photo courtesy of Amazon)

In 2021, Don Roberto customer Estaben Flores sued the company in California Superior Court, alleging that between Feb. 16 and March 3, 2021, one or more unauthorized individuals were able to hack into the company’s computer system and retrieve clients’ personal information, including names, addresses, phone numbers, dates of birth, customer account numbers, Social Security numbers, and employment details.

The company could not be reached for comment. But according to a statement announcing the settlement, Don Roberto “denies it is or can be held liable for the claims made in the lawsuit. The settlement does not establish who is correct, but rather is a compromise to end the lawsuit.”

The settlement gives Don Roberto customers who were California residents at the time of the breach $75 if company records show that their data was exposed; up to $5,000 if they incurred out-of-pocket expenses related to incident, provided they offer supporting documentation such as receipts; and three years of Financial Shield, an identity theft detection service.

Don Roberto has also agreed to implement additional data security measures for at least five years following the settlement’s approval, which is scheduled for July 20.

The deadline to submit a claim is June 26. Applications and instructions on filing claims can be found here.

(Photo: Getty)

Hans Merket, a researcher with the International Peace Information Service (IPIS) who testified in favor of the resolution, says the resolution’s passage will have no immediate consequences.

It “still has to go through the plenary of the parliament,” he says. “As it has the unanimous support of all parties in government, this is not expected to pose problems.

“It basically serves to signal Belgium’s support—and to give the prime minister the mandate—to promote incorporating a ban on Russian diamonds and the listing of Alrosa in the next EU sanctions package,” he says.

Antwerp World Diamond Centre (AWDC) spokesperson Tom Neys agrees the resolution will “have no immediate impact.”

He says: “It underscores how Antwerp and AWDC are looking to contribute to reasonable and watertight solutions to verify the origin of a diamond and exclude Russian diamonds from the G7 markets.”

But in what seems like a pivot away from proposals currently on the table, Neys says that “Belgium will not accept rubber-stamping solutions—like, for example, a system of declarations. A science-based solution will deliver the strongest guarantee for an equal playing field globally to enter the G7 markets.”

Diamonds have not appeared in any of the 10 sanctions packages announced by the European Union following Russia’s invasion of Ukraine. Critics say this has allowed Russian diamonds to continue to flow into Belgium.

Belgium’s government and local industry have generally argued that a ban would be counterproductive, as Russian diamonds would just go to Dubai, which would hurt Antwerp rather than Russia.

Belgium has instead touted a solution that encompasses the entire G7 and includes a mechanism for keeping diamonds out of major consumer markets, like the United States.

In March, ambassador James C. O’Brien, head of the U.S. Office of Sanctions Coordination, told JCK that the United States hoped to present a proposal for keeping Russian diamonds out of G7 markets at the group’s upcoming summit, which will be held in Hiroshima, Japan, from May 19 to 23.

(Photo courtesy of Belgium Parliament)

The requests were made in response to an FTC call for input on its Green Guides, which cover environmental marketing claims and are being overhauled. The comments received by the FTC can be seen here.

The most in-depth submission came from the Jewelers Vigilance Committee, whose 21-page slate of recommendations was endorsed by the U.S. Jewelry Council (a consortium of industry groups), Ethical Metalsmiths, the Black in Jewelry Coalition, CIBJO, and 12 other groups. It can be seen here.

Among the groups’ recommendations:

– Ban the term sustainable.

“The words sustainable or the similar sustainability have been so used and misused they seem to have become meaningless to the consumer,” the JVC said. “Ironically, in some cases [they] have even evolved into red flags for problematic business behavior by savvy consumers, almost automatically evoking ‘greenwashing.’”

The organization asked the FTC to “strongly discourage” use of the word sustainable and “try and eliminate it from marketing.” It said responsible would be a better alternative—but asserted the term needed to have a “real definition.”

– Avoid recycled when it comes to precious metals and gems.

JVC argued that recycling shouldn’t apply in a jewelry context, since recycling has traditionally applied to items that would otherwise be thrown away, and jewelry materials are rarely discarded.

“Bench scraps are reused, melee diamonds are sent in for regrading, possible recutting, and resale, and even the carpets under jewelers’ benches catching metal scrap and dust are sent in for precious metal reclamation,” it said.

The FTC’s current definition of a recycled material would only qualify for gold found in “electronics waste,” JVC noted, and “this is a fraction of the material that is used in refining recycled precious metal.”

Recycled gold has been found to come from sketchy sources, it added.

“Ultimately, consumers want to make decisions about products that are the least harmful possible,” it concluded. “With the current recycled terminology, there is no legitimate way for them to make those choices in the jewelry industry.”

– Disallow claims that lab-grown diamonds are good for the environment.

Lab-grown “diamonds are being marketed as sustainable … and better for the environment. Neither claim has been proven to be true, and both are misleading to consumers,” according to the JVC document.

It said that some companies bill their lab-grown diamonds as mining-free “without acknowledging that the components and equipment necessary to produce their products often come from mined sources, and that the precious metal these products are set in is also mined.”

JVC also asked for “guidance on what mining specifically means to the environment and how to compliantly market products that are mined within the environmental space.”

– Require more information about carbon neutrality claims.

“Some carbon offsets may be totally worthless and, instead of addressing and reducing climate change, actively contribute to it,” said the JVC’s submission. “Carbon neutrality certifications based mostly on offsetting do not actively change what has already happened in a supply chain and do not certify whether a company is reducing its emissions.

“In addition, some carbon offset claims represent emissions reductions that will not occur for two years or longer. This is a claim that is too far removed from its action to be relevant to a consumer’s decision to make a purchase.”

JVC also called for greater enforcement of both the Green Guides and the FTC Jewelry Guides, noting the warning letters the FTC sent to eight jewelry companies in 2019 had an “immediate effect on the industry.”

Also submitting comments on the Green Guides to the FTC were the American Gem Trade Association (AGTA), the Cultured Pearl Association of America (CPAA), the blogger Recycled Gold Paradox, and Wisconsin jeweler Hanna Cook-Wallace.

The AGTA submission also said that recycled should not apply to precious metals or gemstones, and took aim at terms like carbon-free, mining-free, never-mined, and locally sourced. It differed from the JVC’s submission in saying the FTC should adopt the definition of sustainability proffered by the United Nations’ Brundtland Commission: “meeting the needs of the present without compromising the ability of future generations to meet their own needs.”

The Cultured Pearl Association asked for new guidance related to calling nonagricultural products organic, as in “organic gemstones.” It also called for a new definition of sustainability, asserting that pearls may be the “only inherently sustainable gem.”

“Recycled Gold Paradox” argued that the term recycled gold is “widely used to greenwash” and should only apply to gold recovered from electronics. Anything else, according to the submission, should be called reprocessed gold.

Cook-Wallace called for the continued use of the term organic gemstone to describe bone, horn, shell, coral, pearls of all types, and “any other substance used in jewelry that was produced by, or a part of, a recently living organism.” She said sustainable should not be used to described any jewelry product, but said recycled should be allowed to “describe the repurposing or restyling of used and inherited jewelry.”

(Photo courtesy of the Federal Trade Commission)

“Green claims are everywhere: ocean-friendly T-shirts, carbon-neutral bananas, bee-friendly juices, 100% CO2-compensated deliveries and so on,” said Frans Timmermans, executive vice president for the European Green Deal, in a statement. “Unfortunately, way too often these claims are made with no evidence and justification whatsoever.”

While the proposed rules are aimed at E.U. companies, companies that aim communications at customers in the E.U. are also subject to them. The proposed new rules require the approval of the European Parliament.

The move comes after a 2020 E.C. survey assessed 150 environmental claims, and found that 53% of the assertions made by businesses contain “vague, misleading, or unfounded” information. Another survey, in November 2020, found that 40% of eco-claims made by E.U. businesses were likely misleading.

The E.C.’s proposal stipulates:

– Any environmental claims made by businesses be substantiated with “widely recognized” scientific evidence. As part of the scientific analysis, companies must identify any environmental impacts that are relevant to their product, as well as possible trade-offs, so consumers can get a full and accurate picture.

– If any organization compares its products’ eco-impact with a competitor’s, the comparisons must be fair and based on equivalent information and data.

– Claims or labels that use aggregate scoring of the product’s overall environmental impact shall not be permitted, unless set in EU rules.

– Environmental labeling schemes should be solid and reliable, and their proliferation must be controlled. Any labels must be transparent, verified by a third party, and regularly reviewed.

The new directive also includes new rules on claims of “carbon neutrality.”

Said the European Commision statement: “Companies have to be transparent about what part of that claim concerns their own operations, and what part relies on buying offsets.”

Environmental groups complained the new rules didn’t go far enough, with one calling for a ban on claims of “carbon neutrality.”

In the United States, the Federal Trade Commission is currently revamping its Green Guides, which govern environmental claims. In 2018, the FTC wrote to eight sellers of lab-grown diamonds and diamond simulants, warning them not to use “general environmental benefit claims” such as eco-friendly and sustainable.

Photo: Lukasz Kobus/courtesy of the European Commission

On Feb. 28, OSHA issued 12 citations for serious violations, and one citation for a willful violation, to the gold, silver, and nickel plating company’s El Paso, Texas, facility, following an inspection last September. Arizona Traders, which does business as Siltec, has the right to contest the findings.

According to OSHA’s news release, Arizona Traders failed to provide required eyewash stations or showers in areas where employees worked with hydrochloric and nitric acids and ferric chloride.

The agency also charged the company’s premises had obstructed exits, electrical hazards, and improperly stored acetylene and oxygen cylinders. Arizona Traders Co. also failed to establish and implement a program with procedures for determining workplace hazards, it said.

OSHA has recommended fines up to $292,693. The company has 15 business days from the receipt of citations to pay the penalties, request an informal conference with OSHA’s area director, or contest the findings before the independent Occupational Safety and Health Review Commission.

According to OSHA, this is the fourth time the company has been cited. The agency issued Arizona Traders serious citations in September 2011 and then repeat citations in August 2012 for failing to provide employees with a suitable eye-drenching facility. In September 2012, the company received serious citations for failing to conduct a workplace hazard assessment and not conducting required hazard communications.

“This company must change the way it operates and make workplace safety a priority before a tragedy occurs,” said Diego Alvarado, OSHA area director in El Paso, in a statement. “Arizona Traders’ failure to do so is troubling, to say the least.”

The person who answered the phone at Arizona Traders declined comment to JCK.

OSHA guidelines for protecting workers from chemical hazards and toxic substances can be seen here.

(Photo: Getty Images)

Noncompete clauses prevent workers from joining rival businesses, generally within a specific geographic area or time span. Once rare and limited to top management, they now govern the actions of some 30 million people, or about one in five workers, according to the FTC. Critics say they are often tucked into contracts without workers realizing they have signed away their ability to make a living.

The proposed rule—which has not yet been fully approved, may be modified, and will likely be subject to legal challenge—bans noncompete agreements outright, with only one exception: When there’s the sale of a business, workers with a greater than 25% ownership of the old company can be banned from competing.

Sara Yood, deputy general counsel for the Jewelers Vigilance Committee (JVC), says she believes that “more than a few businesses in the jewelry industry” use these clauses.

“The proposed rule is obviously very worker-friendly: The data the FTC references shows that noncompete clauses drive down wages and innovation,” she adds. “In an already challenging labor market, this will make employees better positioned to look for alternate employment. Businesses who may lose the ‘protection’ of noncompetes should look into alternate retention methods and ensure their workforce has access to a competitive benefits package.”

She notes that some businesses use noncompetes as a form of “de facto intellectual property protection”—which she wouldn’t recommend. She suggests that people interested in protecting valuable business information should try more narrowly crafted alternatives, including trade secret law or copyright and trademark protection.

Other options include non-solicitation clauses—where a worker agrees not to solicit a company’s client or customers—and nondisclosure agreements.

In a New York Times editorial promoting the change, FTC Commissioner Lina Kahn argued that the current situation restricts workers’ economic liberty. The FTC estimates that workers’ wages would increase $300 billion a year if the rule is passed.

Sean Heather, U.S. Chamber of Commerce senior vice president for international regulatory affairs and antitrust, called the rule change “blatantly unlawful” and said his group plans to challenge it.

“When appropriately used, noncompete agreements are an important tool in fostering innovation and preserving competition,” he said.

Several states, including California, already have statues banning or limiting noncompetes. The American Bar Association has said it’s unethical for firms to impose them on lawyers—who, ironically, are often the people who draft and enforce these clauses.

The FTC has opened the rule for public comment. Anyone who wishes to comment can do so here.

Photo: Getty Images

The FTC first announced plans to reexamine the Green Guides last year. It’s also planning to reexamine its widely used Jewelry Guides in 2028.

The Green Guides discuss proper ways for marketers to use terms such as recycled, carbon-neutral, and sustainable without deceiving consumers. The Green Guides were first introduced in 1992, and revised in 1996, 1998, and 2012.

In the 10 years since the last revision, “these kinds of claims have multiplied exponentially,” according to a statement from the Jewelers Vigilance Committee (JVC). “The opening set of questions from the FTC indicates that it is focused on a very broad review of the existing guides, but also asks for specific guidance on ‘recycled’ and ‘sustainable’ terminology.”

JVC plans to coordinate an industry-wide response, it said, noting that the deadline for comments will probably be mid-March. It wants industry members to supply feedback on what changes it would like to see in the Green Guides via this form.

Others who want to submit comments directly to the FTC can do so here.

While not jewelry-specific, the Green Guides do cover jewelry marketers. In 2019, the FTC sent warning letters to eight lab-grown diamond and simulant companies about possible violations of the Green Guides. The agency noted that the Guides prohibit using “general environmental benefit claims,” such as eco-friendly and sustainable, which it said lacked clear definitions.

Photo courtesy of the Federal Trade Commission

Hadjiev was indicted in September 2019 for allegedly buying and selling counterfeit Rolexes and customizing genuine Rolexes with counterfeit parts. The government also claimed that Hadjiev “structured” deposits to avoid fulfilling reporting requirements for cash transactions.

The Internal Revenue Service requires businesses file a Form 8300 for cash transactions over $10,000 within 15 days of that payment. The IRS guidelines for filing the forms can be seen here.

Among the government’s allegations is that, after Hadjiev received $29,000 in cash for a transaction, he made two deposits: one for $9,900, the other for $7,250. Both were under the $10,000 threshold and were viewed by the government as an attempt to evade the reporting requirement. The total amount of money involved tops $750,000, according to the government statement.

The jury found Hadjiev guilty on four counts and not guilty on 15 others. Following his conviction, Hadjiev has been ordered to “cease all operations of business as a jeweler.”

According to the Delaware Daily Voice, Hadjiev’s celebrity clientele included boxer Floyd Mayweather and Playboy founder Hugh Hefner.

“A jury of Mr. Hadjiev’s peers confirmed what the government first alleged during the indictment: that Mr. Hadjiev trafficked counterfeit goods, laundered the proceeds, and structured deposits in an effort to avoid currency reporting requirements,” said Yury Kruty, special agent in charge of IRS Criminal Investigations, in the government statement. “The Special Agents of IRS-CI and our law enforcement partners will continue to investigate and bring to justice criminals like Mr. Hadjiev who partake in schemes like this out of greed.”

Hadjiev’s attorney did not return a request for comment by the time of publication.

Photo: Getty Images