Private equity firm Apollo Global Management will take Rackspace private in the all-cash deal.
Lifestyle Lift, a cosmetic surgery organization with 40 U.S. locations, will pay New York State $300,000 and cease posting false online advertising by using its employees to post positive reviews on the Internet that appear to come from customers.
Lifestyle Lift Inc., a cosmetic surgery organization with 40 U.S. locations, has agreed to pay New York State a fine of $300,000 and to cease false online advertising by using its employees to post reviews on the Internet that appear to come from legitimate customers. The settlement with the state comes in the first legal case involving employees posing as independent consumers to fraudulently post reviews on the Internet, the office of State Attorney General Andrew Cuomo says.
“This company’s attempt to generate business by duping consumers was cynical, manipulative and illegal,” Cuomo says. “My office has and will continue to be on the forefront in protecting consumers against emerging fraud and deception, including ‘astroturfing,’ on the Internet.” Astroturfing is a term used to describe the use of a company’s employees to post positive online reviews made to appear as if they’re from an independent consumer.
Lifestyle Lift, which operates LiftstyleLift.com for online consultations, is a unit of Troy, MI-based Scientific Image Center Management Inc. In a statement released after the settlement with New York, the company apologized for its past practices. “Lifestyle Lift regrets that earlier third-party web site content did not always properly reflect and acknowledge patient comments or indicate that the content was provided by Lifestyle Lift,” the company said. “Today, all existing web content is in compliance with acceptable business standards.”
Gordon Quick, president of Lifestyle Lift, said in the statement that the complaints filed by Cuomo’s office were related to a period prior to the company’s current management team taking charge. Pledging to be a leader in Internet communications, Quick said the company is now operating under its own code of Internet conduct and assurance, which says in part: “We promise that any Internet communication accompanied by our logo can be relied upon as true and accurate, and all communications originating from our practice will be clearly identified with the Lifestyle Lift logo.”
According to Cuomo’s office, Lifestyle Lift posted the phony reviews on a number of Internet message boards and on special web sites Lifestyle Lift developed and designed to appear as if they had been developed by independent consumers. “Some of these sites purported to offer forums for users to add their own comments about Lifestyle Lift,” Cuomo’s office says. “In reality, however, Lifestyle Lift either provided all the ‘user comments’ themselves, or closely monitored and edited third-party comments to skew the discussion in favor of Lifestyle Lift.”
Cuomo’s office says it discovered internal Lifestyle Lift e-mail messages that instructed the company’s employees to “do postings on the web as a satisfied client.” The investigation was handled by Internet Bureau chief Justin Brookman and investigator Vanessa Ip under the direction of Michael Berlin, deputy state attorney general for economic justice.
In a related matter, the Federal Trade Commission is expecting to vote soon on proposed updates to its Guides Concerning the Use of Endorsements and Testimonials in Advertising, an FTC spokeswoman says. Included among the updates are requirements for companies to disclose any relationships between online testimonials, including those made by Internet bloggers as well as independent consumers, and the companies mentioned in the testimonials.
The guidelines were last updated in 1980, the FTC spokeswoman says.