In late November, the Federal Trade Commission and the California Attorney General's Office reached a settlement with DNA testing company CRI Genetics, resolving allegations that the company had misled consumers in connection with the marketing of its DNA reports.  As part of the settlement, the company agreed to pay a $700,000 civil penalty. 

This enforcement action highlights a number of key areas that the FTC is focused on right now.  As Samuel Levine, the director of the FTC's Bureau of Consumer Protection explained when announcing the settlement, “Today's action continues the FTC's crackdown on deceptive reviews, dark patterns, and baseless claims around algorithmic solutions.”  Although this enforcement action is focused on a provider of DNA reports, there are some important takeaways in this enforcement action for all advertisers.  

False DNA Testing Claims

According to the FTC's complaint, CRI Genetics marketed DNA test kits and DNA reports that it claimed would provide consumers with information about their genetic ancestry.  The FTC alleged that the company advertised that its products were the most accurate and detailed DNA tests on the market, that its reports would show consumer's genetic ancestry with an accuracy rate of over 90%, and that those reports would show exactly where consumers' ancestors came from.  These claims included statements such as: 

• The most accurate estimation of your ancestry possible”; 
• “Our results are typically 99.9% accurate”; and
• “CRI Genetics matches your unique DNA with 642,824 genetic markers to both show you where your ancestors are from and also to pinpoint precisely when they got there.”  

The FTC charged that these claims – and others like them – were false and unsubstantiated, however.  The FTC said that the company's comparative claims were unsubstantiated, since the company didn't have access to information about the accuracy of other companies' data.  The FTC explained, “Because Defendant did not have access to this information, it could not have had a reasonable basis for its claim of superior accuracy.”  The FTC also said that the company's own data didn't support its claims about the accuracy of its results.   

These allegations highlight an important point for advertisers to consider as you're developing claims.  You've got an obligation to ensure that your claims are properly substantiated, and it's no excuse that you don't have access to the data to support those claims.  In other words, if you don't have access to the data, you can't make the claim.  

Deceptive Review Websites

The FTC also charged CRI Genetics with creating websites that appeared to publish independent reviews of DNA test kits, but which were , in fact, just advertising in disguise for CRI Genetics.  

For example, the FTC alleged that the company created the “Genetics Digest” website, which promoted itself as providing “unbiased product reviews for consumers looking to purchase anything related to the field of genetics.”  The site then published purportedly independent reviews that reported that the CRI Genetics' products were the best.  

Interestingly, at some point, the website added a disclaimer to the top of the landing page that said, “Genetics Digest has a financial connection to products sold via links on our website such as our top choice:  CRI Genetics.”  Then, later, the disclaimer was revised to say, “Genetics Digest aims to provide you with helpful information about DNA analysis and Genome Testing advancements.  We are affiliated with CRI Genetics.”  

It should come as no surprise to advertisers that the FTC was troubled by an advertiser creating what is essentially a fake review website.  What is worth noting here, though, is that the FTC believed that the disclaimers that explained that there was a connection between the site and the brand – at the top of the homepage – were not sufficient to cure any consumer confusion.  First, the FTC thought that the disclaimers were not sufficiently clear and conspicuous, since they were “in much smaller size font and much lighter color than the prominent title of the website.”  The FTC also thought that the language of the disclaimers themselves weren't clear enough about what the relationship was.  The FTC said that the disclaimers “did not adequately inform consumers that, in fact, Defendant effectively owned and operated the Genetics Digest website and that the reviews and ratings of the DNA ancestry companies were not based on independent and unbiased research.” 

There are a some important takeaways from these allegations as well.  First, advertisers must ensure that the advertising formats that they use aren't deceptive to consumers; they shouldn't mislead consumers into believing that they're seeing independent editorial content, when they really aren't.  But, even more significant here, the FTC is saying that you had also better make sure that, when disclaimers are needed, that they are very prominent and very clear about what the specific connection is.  That light grey text that communicates ambiguous messages – or that doesn't tell the full story – isn't going to be effective, apparently. 

Fake Endorsements

The FTC also charged CRI Genetics with posting fake consumer endorsements on its website and on its Facebook page.  The FTC said that these endorsements – which included photos of the endorsers, their first name and last initial, a star rating, and a quote – were “completely fabricated.” 

The FTC also alleged that the company created a video that appeared to include a real consumer endorsement as well.  The FTC said that the consumer, named “Wayne,” was just a paid actor.  Interestingly, though, the endorsement was apparently “loosely based on one of Defendant's customers, who did not provide Defendant with an endorsement or cooperate in making the video.”  

It's also no big news that you shouldn't promote your product using fake consumer endorsements.  But, the video of “Wayne,” which was apparently based on an actual consumer, does raise some interesting issues to keep in mind.  In the FTC's recent revision of its Guides for the Use of Endorsements and Testimonials in Advertising, the FTC advised that an advertiser may accompany an endorsement with an image or likeness of a person who isn't the actual endorser, so long as the the talent used doesn't misrepresent a material attribute of the endorser.  Although the FTC is giving advertisers some flexibility here about how to depict an endorser, the FTC is making clear in this enforcement action that, even if you're using a model or an actor, there still needs to be a real endorsement that supports what you're depicting.

Deceptive Billing Practices

Finally, the FTC charged CRI Genetics with engaging in “dark patterns” when consumers ordered products on the company's website. 

The FTC alleged that, in order to buy one of the company's testing kits, consumers were required to click on one of the two packages that the company advertised.  Then, consumers were prompted to enter and submit their personal and payment information.  The FTC was concerned, however, that the consumers didn't understand that once they had submitted their payment information that the order was final.  The FTC explained, “The website ordering page did not disclose that when consumers entered their payment information that they would be charged immediately for each item selected for purchase and that the order for that item as final.” 

The FTC also alleged that once consumers had (apparently, unwittingly) placed their order, CRI Genetics misled consumers into thinking that the order was not final until they navigated through several pages of upsells.  The FTC explained, “Consumers had to click through as many as five of these offers for additional products and services and either decline or purchase each one before moving on in the ordering and purchasing process.” 

These allegations raise some important issues for marketers to keep in mind as well.  First, it's important to make sure it's clear to consumers when they are completing their order.  If by entering payment information the order is final (and there's no further chance to review and finalize the order), you want to make sure that this is obvious to consumers.  Second, these allegations warn that you shouldn't mislead consumers into thinking that they have to take additional steps to complete their order when that isn't the case.  Third, this case raises the question of whether requiring a consumer to submit to numerous upsells, in order to complete a purchase, could be considered a “dark pattern.”  Here, consumers were told that their order wasn't complete – even though, in reality, it was – to get them to navigate through the upsells screens.  But, what if the order wasn't truly complete?  Is there any limit on the number of upsells you can require a consumer to reject in order to complete an order?