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This Skincare Company Admitted to Posting Fraudulent Reviews but Escaped FTC Punishment

October 22, 2019, 9:42 PM UTC

Sunday Riley’s luxury skincare products have had a glowing reputation for quite some time. But it turns out that over the last two years, some of the product reviews on Sephora.com weren’t showing their true face. Many were coming directly from the skincare company, and in some cases, CEO Sunday Riley herself.

This week, the Federal Trade Commission released its administrative order resolving the complaint against Sunday Riley for its fraudulent reviews. But based on a vote by the commission, no punitive measures will be taken against the skincare company, nor will it be asked for an apology. The brand must promise not to post fraudulent reviews in the future, and if employees review products, they must disclose their bias.

The FTC began to investigate Sunday Riley after an internal email from a whistleblower was posted on the SkincareAddiction SubReddit thread, exposing the company’s internal practice of “encouraging” employees to post positive reviews of products on Sephora.com, and set up a virtual private network (VPN) to conceal the review fraud from Sephora. In the accompanying post, the whistleblower alleged that Sunday Riley herself directed the fraud, along with the head of sales.

Fortune reached out to representatives for Sunday Riley, Sephora, and the FTC, but has not received any responses at this time.

The Instagram beauty watchdog @esteelaundry also published the email, to which Sunday Riley (the brand, not the person) admitted to encouraging employees to post fake reviews to counterbalance negative reviews posted by competitors. “At one point, we did encourage people to post positive reviews at the launch of this product, consistent with their experiences,” the company wrote. “There are a lot of reasons for doing that, including the fact that competitors will often post negative reviews of products to swing opinion. It doesn’t really matter what the reasoning was. We have hundreds of thousands of reviews across platforms around the globe and it would be physically impossible for us to have posted even a fraction of these reviews.”

Some consumers are concerned that the FTC didn’t take strong enough measures against the company, setting a precedent that could encourage other brands to post fraudulent reviews without a fear of consequences.

Author and podcast host Aminatou Sow tweeted that the FTC’s handling of the Sunday Riley case could have far-reaching implications for consumer transparency and safety. “I know we’re all LOLing about this but there’s a lot of serious stuff going on here. The @FTC settled with Sunday Riley for zero consumer refunds or forfeiture of profits or even an admission of wrongdoing! The opposite of consumer protection!”

Sow also tweeted: “This is bad when you think of all the ways platforms can enable businesses to post fake reviews. Reviews some of us rely on to make important decisions about what we put on our bodies.”

At the FTC, Commissioners Rohit Chopra and Rebecca Kelly Slaughter (who voted against the settlement) wrote a letter of dissent, disagreeing with the FTC’s decision to allow Sunday Riley to walk away without repercussions. “The proposed settlement is unlikely to deter other would-be wrongdoers. Consider the cost-benefit analysis that a firm might undertake in considering whether to engage in review fraud,” the statement reads, acknowledging the widespread issue of review fraud. “The proposed resolution of this matter suggests that even the narrow subset of wrongdoers who are caught and attract law enforcement scrutiny will face minimal sanctions.”

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