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US general law.

I'm curious...

Company [A] is in the digital services industry and has been in business for a decade. During their operations they receive many rave testimonials/reviews about their service.

"[A] has been exceptionally responsive... "[A] is great".. etc.

Company [B] then buys out Company [A] and assumes all operations.

However, the the name and/or branding does not change after the buyout. To customers, everything still looks like it is Company [A] and no visible transfer of services has occurred. Although the services are now entirely under the operations of Company [B].

Company [B] continues, for many years, to use testimonials/reviews related to the performance of the original Company [A]. Testimonials/reviews are in no way related to the performance of Company [B], under the guise of Company [A].

Company [A] technically no longer exists, rather it is Company [B] doing business as Company [A].

Can Company [B] continue to use testimonials/reviews originally referencing the performance of Company [A]?

Are the testimonials/review permitted merely because the visible "face" of the company hasn't changed? Even if the entire backend operations have?

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  • is this different to asking whether a company can legally continue to use old testimonials after hiring a new COO, for example?
    – user253751
    Jan 18 at 14:04
  • @user253751 I think so. A new COO may change operational procedures. But Company [B] is an entirely new entity, merely DBA the original company. It's like McDonalds selling burgers under the Burger King name. While the product may be similar, it's not the same product.
    – Scott
    Jan 18 at 18:58

1 Answer 1

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After a buyout, can a company legally continue to use old testimonials?

Yes. What you describe would not suffice for a finding of false and misleading practices.

For purposes of pricing the acquisition, it is most likely that company's A prestige was factored in. After all, as Kaspersky Lab, Inc. v. US Dept. of Homeland Sec., 909 F.3d 446, 461 (2018) points out, "reputation is an asset that companies cultivate, manage, and monetize". As company A has --or could have-- monetized its reputation via the acquisition price, it would be inconsistent to preclude company B from using an asset for which it paid.

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  • Thanks. That makes sense. +1 I guess I wondered how long such an asset is viable. If B acquired A in 2008... and are still using A's testimonials in 2022... it seems at best unsavory, at worst fraudulent after more than a decade.
    – Scott
    Jan 18 at 19:07
  • @Scott "I wondered how long such an asset is viable." At least for as long as B maintains or improves A's trend of performance. Reputation is not susceptible to the same processes of depreciation that affect other assets. "it seems at best unsavory, at worst fraudulent after more than a decade." For it to count as fraudulent, customers would have to have incurred losses as a result of their reasonable reliance on B's misrepresentations. If the date of testimonials is available to customers, prevailing on a claim of fraud (on grounds of visibly old testimonials) is much unlikelier. Jan 18 at 20:22
  • Okay. That too makes sense. As you can probably surmise, I have a specific instance in my head. I've used services for 10 year under [A]'s ownership and an additional 10 years under [B]'s ownership. Yes, services have considerably declined in the decade B has owned the company - I have written evidence in some instances. Unfortunately dates of testimonials are not publicly available. Losses have been incurred. I have no plans to pursue anything and am not seeking any legal advice. I was merely curious what may or may not be permitted in terms of the testimonial usage. Thanks for the info!
    – Scott
    Jan 18 at 21:12

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