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Retailer Rebuked by FTC for Posting Fake Online Reviews

But two commissioners say the agency is going too easy on the firm.

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Retailers of all types want a flattering online presence, but a new Federal Trade Commission case serves as a warning: Fake reviews don’t pay.

The FTC has halted what it calls the “deceptive online marketing tactics” of a company that allegedly used fake product reviews posted by its employees on a well-known retail website.

Cosmetics firm Sunday Riley Modern Skincare LLC and its CEO, Sunday Riley, have agreed to settle an FTC complaint, according to a press release from the agency. They were alleged to have posted fake reviews to Sephora.

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“Dishonesty in the online marketplace harms shoppers, as well as firms that play fair and square,” said Andrew Smith, director of the FTC’s Bureau of Consumer Protection. “… It undermines the marketplace, and the FTC will not tolerate it.”

Wired.com noted, however that the settlement “did not require the company to admit fault, notify customers of the fraud, or turn over any ill-gotten gains.”

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As such, Commissioner Rohit Chopra, who along with Commissioner Rebecca Slaughter dissented from the FTC decision, stated: “Dishonest firms may come to conclude that posting fake reviews is a viable strategy, given the proposed outcome here. Honest firms, who are the biggest victims of this fraud, may be wondering if they are losing out by following the law. Consumers may come to lack confidence that reviews are truthful.”

As detailed in the FTC’s complaint, Texas-based Sunday Riley Skincare sells a variety of cosmetic products, including Luna Sleeping Night Oil, Good Genes All-In-One Lactic Acid Treatment, Blue Moon Tranquility Cleansing Balm, Start Over Active Eye Gel Cream, Bionic Anti-Aging Cream and C.E.O. Rapid Flash Brightening Serum. The company sells its cosmetics at Sephora, a multinational chain of personal care and beauty stores, and on the Sephora.com website. The products sell for between $22 and $158 each, according to the FTC.

Sephora allows consumers to leave customer reviews of products sold on its website, providing a forum for sharing authentic feedback about the products it sells, the FTC explained. In its complaint, the agency alleged that between November 2015 and August 2017, Sunday Riley Skincare managers, including Riley herself, posted reviews of their branded products on the Sephora site using fake accounts created to hide their identity, and requested that other Sunday Riley Skincare employees do the same thing.

The FTC alleged that after Sephora removed fake employee-written reviews, Sunday Riley Skincare employees suspected this was because Sephora recognized the reviews as coming from their IP addresses. Sunday Riley Skincare then allegedly obtained, according to one of the company’s managers, “an Express VPN account [to] … allow us to hide our IP address and location when we write reviews.” A VPN (virtual private network) lets users access the internet privately using separate servers to hide their online activity.

The FTC complaint also quoted from a July 2016 email that Riley wrote to her staff directing each of them to “create three accounts on Sephora.com, registered as … different identities.” The email included step-by-step instructions for setting up new personas and using a VPN to hide their identities, and directed employees to focus on certain products, to “[a]lways leave 5 stars” when reviewing Sunday Riley Skincare products, and to “dislike” negative reviews. “If you see a negative review – DISLIKE it,” Riley wrote, adding: “After enough dislikes, it is removed. This directly translates into sales!!”

The FTC’s complaint charged Sunday Riley Skincare and the CEO with two violations of the FTC Act: 1.) making false or misleading claims that the fake reviews reflected the opinions of ordinary users of the products; and 2.) deceptively failing to disclose that the reviews were written by Riley or her employees.

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The proposed administrative order settling the FTC’s allegations against Sunday Riley Skincare and Riley is intended to ensure the respondents do not engage in similar allegedly illegal conduct in the future, according to the release. First, the order “prohibits the respondents, in connection with the sale of any product, from misrepresenting the status of any endorser or person reviewing the product,” according to the agency. This includes misrepresentations that the endorser or reviewer is an independent or ordinary user of the product.

Next, the order “prohibits the respondents from making any representation about any consumer or other product endorser without clearly and conspicuously disclosing any unexpected material connection between the endorser and any respondent or entity affiliated with the product.” Such disclosures must be made in close proximity to the product review or endorsement.

In addition, the order requires the respondents to instruct their employees and agents about their responsibilities to clearly and conspicuously disclose their connections to the respondents’ products in any endorsements.

The Commission vote approving the administrative complaint and proposed consent order in the Sunday Riley matter was 3-2, with Chopra and Slaughter voting no.

The public may submit comments on the proposed consent order through Regulations.gov. The comment period opened on Oct. 25. Comments will be accepted for 30 days from publication in the Federal Register, after which the agency will decide whether to make the proposed consent order final. Comments received will be posted on Regulations.gov.

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Since launching in 2014, INVISION has won 23 international journalism awards for its publication and website. Contact INVISION's editors at editor@invisionmag.com.

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AOA Approved for Group Purchasing of Lenses, Frames, Contacts

The U.S. Department of Justice gave its OK.

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The U.S. Department of Justice has given the American Optometric Association the nod to expand its group purchasing activities to include lenses, frames and contacts.

The association and its subsidiary AOAExcel GPO LLC had asked the department for a business review letter on the matter. Law360 explains that such a document can provide “proactive assurances of non-enforcement.”

The department explained in the Jan. 15 letter that it “presently does not intend to challenge the GPO’s expansion to include optometric products.” It noted, however, that it “reserves the right to challenge the GPO in the future if the GPO’s operations are determined to be anticompetitive in purpose or effect.”

Up until now, AOA’s group purchasing organization has only offered non-optometric products, such as professional liability insurance, credit card processing, life insurance, general office supplies, general medical supplies and equipment. It uses Intalere, a third-party healthcare group purchasing organization, as its agent to negotiate discounts on products and services.

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As of February 2019, 1,011 association member optometric practices had signed up to participate, and 251 practices had made at least one purchase.

The Department of Justice wrote: “Based on our investigation and your representations described above regarding the GPO [group purchasing organization] and its proposed expansion to include optometric products, the GPO expansion is unlikely to produce anticompetitive effects.”

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Biotech Firm Raises $30M for Eye Disease Therapies

It’s focusing on retinal and other ophthalmic maladies.

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PARIS & FORT WORTH, TX — Eyevensys, a biotechnology company developing non-viral gene therapies for retinal and other ophthalmic diseases, has completed a $30 million funding round.

The company will use the funds to continue development of its clinical lead candidate — known as EYS606 — for the treatment of chronic non-infectious uveitis, including the launch of its Electro Study, according to a press release. This Phase 2 trial, to be conducted in the U.S., will evaluate the safety and efficacy of the candidate in patients with active forms of all anatomic uveitis subtypes.

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The funding will also advance the preclinical development of the firm’s other therapeutic proteins targeting ophthalmic diseases with unaddressed medical needs, such as retinitis pigmentosa and age-related macular degeneration. A product candidate known as EYS606 is currently in a phase I/II clinical trial in the European Union and has been granted an Orphan drug designation by the European Medicines Agency for the treatment of non-infectious uveitis.

The new Series B financing round was led by Boehringer Ingelheim Venture Fund and included participation from existing investors Pontifax, Bpifrance, CapDecisif, and Inserm Transfert, as well as new investors, the Global Health Sciences Fund (Quark Venture LP and GF Securities) and Pureos Bioventures.

In conjunction with the financing, Eyevensys has added members to its board of directors. Neena Kadaba, PhD, director of science at Quark Venture LP, joined the board, as did Dominik Escher, PhD, managing partner at Pureos Bioventures and former founder and CEO of ESBATech, an ophthalmology biotech company acquired by Alcon in 2009.

Eyevensys has also recently opened a wholly owned U.S. subsidiary in Fort Worth, TX. All U.S. operations will be managed from this location, though the Eyevensys headquarters will remain in Paris.

Dr. Patricia Zilliox, Chief Executive Officer, said, “We are thrilled to have completed this Series B funding round with the strong support from both existing and new investors for the company. This funding will assist the further development of our technology and position Eyevensys as an innovator in the field of ophthalmology.”

She continued: “As we launch the Electro Study, our first U.S. clinical trial, Eyevensys will also have an opportunity to connect with ophthalmology opinion leaders in the U.S. to gain further exposure for our groundbreaking technology platform. This will also move the company one step closer to providing a more effective and convenient treatment approach to ease the burden of managing patients with chronic ocular conditions.”

As for technical specifics, the company states:

The Eyevensys technology is a non-viral gene therapy ocular drug delivery platform that uses an Electrotransfection System to deliver DNA plasmids encoding therapeutic proteins into the ciliary muscle. This turns the eye into a biofactory, allowing the ciliary muscle to express and secrete the therapeutic protein to the back of the eye at therapeutic levels for a duration of greater than 6 months.

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Smart Glasses ‘Breakthrough’ Likely Not Far Off, Zuckerberg Says

New products ‘will redefine our relationship with technology.’

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Facebook CEO Mark Zuckerberg says major developments in augmented reality are probable in the coming decade, CNBC reports.

He offered his thoughts in a Facebook post last week, writing, “The technology platform of the 2010s was the mobile phone. While I expect phones to still be our primary devices through most of this decade, at some point in the 2020s, we will get breakthrough augmented reality glasses that will redefine our relationship with technology.”

CNBC decribes augmented reality as “technology that lets users place digital objects on top of the real world.”

Zuckerberg acknowledged that some augmented-reality products to this point have felt “clunky.” But he said new products “will be the most human and social technology platforms anyone has built yet.”

He said augmented reality could improve many areas of life, including careers: “Imagine if you could live anywhere you chose and access any job anywhere else. If we deliver on what we’re building, this should be much closer to reality by 2030.”

In September, Facebook was reported to be working with Luxottica to develop a pair of smart glasses. The project was reportedly code-named Orion.

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The glasses would be intended to disrupt the smartphone market. Zacks reported at the time that the idea was to “allow users of the smart glasses to take calls, livestream on social media and many other such features that are intended to replace smartphones.”

With the smart glasses project, Facebook was apparently “raising its efforts to withstand the intense competition in the next-generation glasses space from Snap, Google, Microsoft and Apple,” Zacks said at the time.

Read more at the CNBC

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