New HUD Rules and FTC Updates: Is Your Reputation at Risk?

This webinar highlighted some common review practices happening in the industry that could put management companies and their communities' reputations at risk:

1. If leadership doesn't know what onsite teams are posting on social platforms in regards to review generation requests/tactics, it's time to start educating them on Best Practices from this webinar. There are many social media forums and groups on Facebook, Reddit, etc. where leasing agents, maintenance techs, and property managers are asking for reviews from employees of other properties and management companies. As we learn in this webinar, asking people who have not used the product or service to write a review (especially a 5-star review), is a deceptive review practice according to the FTC. Are you ensuring your teams are educated on What Not To Do? And do you know the liability risks for fraudulent review practices?

2. If any of your communities are offering any incentives (enter to win, raffles, gift cards, swag...anything) for any type of online review, it SHOULD be disclosed by the reviewer. While this is not yet a rule as of June 2024, according to Jay Harris, it is a guideline from the FTC, and is the most ethical practice as a consumer-facing organization to be transparent about incentivized reviews.

3. Review distortion includes practices like filtering/sorting higher reviews at the top, hiding or suppressing (or keeping "negative" reviews as internal feedback) less than favorable reviews, and incentivizing (or threatening) people to remove or update negative reviews.

4. Using employee structured incentive or bonus programs to generate reviews is not in the FTC rules or guidelines (yet). However, such programs can contribute to added pressure on the onsite teams, ultimately leading team members to use fraudulent methods to gain more reviews. Therefore, it may be time to re-evaluate your customer experience bonus structures.

1. New HUD Rules
& FTC Updates
IS YOUR REPUTATION AT RISK?

2. Jay Harris
Partner
Hudson Cook, LLP
Carla J. Alicea
Director of
Research and Performance
SatisFacts &
ApartmentRatings
Moderated by:
Meet The
Legal Expert

3. A Growing Public Concern
In 2022, Google
removed 115 million
rule-breaking reviews
from Google Maps, a
20% increase from
2021's 96 million, and
significantly higher
than the 90 million
policy-violating
reviews removed in
2020.
In 2022, Amazon
blocked over 200
million suspected
fake reviews on its
platform.
A 2022 study from
Frontiers in Artificial
Intelligence
highlighted the
sophisticated
methods used by
fraudsters and the
challenges platforms
face in identifying
and removing fake
reviews.
In August 2023, the
FTC and six states
sued Roomster Corp.
and its owners,
imposing a $36.2
million judgment and
$10.9 million in civil
penalties for
misleading
consumers.
As the popularity of online reviews has grown, so has the problem of fraudulent reviews.

4. Biennial Online Renter Study
In Jan 2024, SatisFacts released the latest Biennial Online Renter Study, which found that 22% of
renters reported that the positive reviews they read were inflated compared to their actual living
experience.
Sampling: Residents of participating management companies and visitors to
ApartmentRatings.com
n = 3920

5. IS YOUR
REPUTATION
AT RISK?
A Qualitative Analysis
Of The Quest For Truth
Download The Report
satisfacts.com/researchfindings/reputation-risk-management/

6. ●Unfair and Deceptive Acts and
Practice (UDAP) Violations
●3rdP Marketer (AppWin)
●20,000+ fake positive social media
reviews
●Fake iTunes and Gmail accounts
FTC V.
ROOMSTER
(Aug. ‘23)

7. $36.2 million
SETTLEMENT
FTC V.
ROOMSTER
(Aug. ‘23)

8. “Baiting renters with fake reviews and
bogus listings harms those trying to
find an affordable place to live and
cheats honest competitors,
undermining the online marketplace.”
Samuel A.A. Levine, Director of the FTC’s
Bureau of Consumer Protection

10. CRFA: Prohibited Non-
Disparagement Lease Language
•“You agree not to defame or leave negative reviews (includes any review or
comment deemed to be negative by a Shore to Please Vacations LLC officer or
member, as well as any review less than a “5 star” or “absolute best” rating) about
this property and/or business in any print form or on any website….”
•“[D]ue to the difficulty in ascertaining an actual amount of damages in situations
like this, breaching this clause … will immediately result in minimum liquidated
damages of $25,000 paid by you to Shore to Please Vacations LLC.”
In the Matter of Shore to Please (FTC Final Ord. 7/29/19)

11. FTC ENDORSEMENT GUIDES
(June ‘23)
a.personal or business relationship (employee reviews)
b.receipt of monetary payments (paid reviews)
c.endorser’s receipt of free/discounted products (rent discount)
d.chance of winning a prize or money (“best review” campaigns)
1. These material connections of the endorser (including social
media posts) to the seller require clear and conspicuous
disclosure:

12. CLEAR AND CONSPICUOUS DISCLOSURES

13. FTC ENDORSEMENT GUIDES
(June ‘23)
a.Sorting reviews by favorability, such as putting highest star reviews at the top
b.Hiding, deleting or otherwise suppressing unfavorable reviews
c.Labeling reviews as “the most helpful” when the advertiser, not other consumers,
makes that determination
d.Buying or otherwise incentivizing positive reviews, especially fake reviews
e.Threatening reviewers who publish negative reviews
2.Consumer Review “Distortion” Can Be “Misleading”

17. FTC TRADE RULE (PROPOSED)
(June ‘23)
a.Using fake reviews or testimonials
b.Reusing or repurposing consumer reviews for a substantially different product
c.Paying for positive reviews or social media indicators
d.Suppressing honest negative reviews or paying for negative reviews of a competitor
e.Letting employees write reviews without proper disclosures
f.Inflating social media influence via purchased “likes” and followers
The proposed rule would prohibit advertisers from:

18. 1.“Think about priming the pump by
having your staff post some
positive reviews? Think again.”
a.FTC has brought multiple
actions for review posting
without disclosing connection
to business
2.Corporate officers and third-party
marketing agent sued individually
Roomster:
Federal Trade Commission
Protecting Renters’ Rights (June 4 blog post)
1.Illegal to prohibit or restrict
residents’ opinion posting in
lease/contract
2.FTC v. Staffordshire Property
Management
Consumer Review
Fairness Act

19. FTC: Enforcement -
Review Suppression
Yotpo (review management services)
Fashion Nova (Mar. 2022)
4- and 5-star reviews automatically published (4,500 clients)

21% of 1-star reviews and 31% of 2-star reviews submitted to merchants were published

21. Step 1: Assess the Current Situation
Step 2: Address Any Gaps
WHAT TO DO NEXT
Do you have an
up-to-date
written policy on
employee/resident
endorsements?
Do you conduct
training for
marketing and field
teams on the
Policy?
Do you ensure that
3rd party firms
follow the Policy?
Do you consult with
experienced
counsel?
Do you monitor
property- and
brand-related
posts for
employee,
resident, 3rdp
marketer
disclosures?

22. HUD: Fair Housing and
Marketing AI
Marketing Guidance (May ‘24)
•Audience Categorization Tools (esp. Custom and Mirror Audience Tools)
•Algorithmic Ad Delivery
•Follows U.S. vs. Meta (Audience selections that violate FH)(2022)
⚬Foreign-language subscriptions (Univision)
•Rental housing example – Concerns with audience targeting to mirror property’s
“White and childless” resident base

23. Advertisers Should
HUD: Fair Housing & AI
Obtain information
on how ad
platforms mitigates
risks
Identify housing ads
as such to platform
Consider source and
analyze composition
of audience datasets
used for
custom/mirror
audience tools
Monitor ad campaign
outcomes (e.g.,
actual ad delivery) to
identify, mitigate
discriminatory
outcomes
Use ad platform
tools to evaluate
projected
demographics of
targeted audience

24. Mr. Harris is Partner in the Washington, DC office,
where he leads the Residential Property Management
practice and counsels rental housing vendors and
operators. Earlier, he was General Counsel to several
national rental housing vendors and Vice President of
Property Management for the National Apartment
Association and National Multifamily Housing Council.
Jay Harris - Partner



202.960.5602
[email protected]
Connect on LinkedIn
www.hudco.com
Residential Property Management Practice
Litigation, Commercial Agreements, and
Compliance
✦ Consumer Data Privacy and Artificial
Intelligence
✦ Data Safeguards and Vendor Management
✦ Accounts Receivable and Debt Collections
✦ Security Deposit Alternatives and Renters'
Insurance
✦ Tenant Screening and Renter History
Reporting
✦ Online/Offline Marketing
✦ Website Accessibility
✦ Electronic Leasing
✦ Consumer Payments

26. Thank you!
satisfacts.com/webinars