Monday Mornings with Madison

Fake Reviews – Part 2

The Effects of Astro-turfing and Carpet-Bombing

With the advent of the Internet, word-of-mouth referrals, written recommendations and printed reviews have spread into the online world.  All manner of websites now allow consumers, experts and trusted sources to write reviews about any product or service… or person, for that matter.  Such sites abound including Linked In, Yelp, Trip Advisor, Angie’s List, Urbanspoon and countless others.  They allow people to rate everything from restaurants and hotels to retailers and professionals.  The problem is that as much as a quarter to a third of all online reviews are totally fake.

Some companies spend a lot of time and money to get good fake reviews or generate bad reviews for competitors.  Why do they do it?   Is it really all that beneficial to the business?  And, if so, what’s to stop all businesses from writing fake reviews until no reviews – even legitimate ones – will have any credibility?

Fake Reviews:  The Positive and the Negative

There are two kinds of fake reviews.  The more well-know is astro-turfing, which is the process of having people give (or seem to give) positive reviews, testimonials, endorsements or statements as to the performance or quality of a product or service without the reviewers having any personal knowledge of the product or service.  In this deceitful practice, the review of a product or service is meant to appear unbiased and unsolicited but is actually nothing more than an advertisement.  The reviewer is being paid or compensated in some way, typically by the entity benefitting from the positive review or an agent of that entity, to render that good opinion.  The reviewer may or may not have any personal knowledge about the product, service or person… but the opinion is definitely biased.

Then there are the negative fake reviews.  In those cases, people paid to post those are referred to as carpet-bombers.  These are people incentivized to leave bad reviews in order to make readers avoid a restaurant, hotel or business.  It is a tactic adopted by competitors to torpedo their competition.  It is done to undermine the reader’s confidence in positive reviews, damage the establishment or product’s ranking on review sites and thus that business’ sales. They are, like fake positive reviews, designed to game the system… but in reverse.

So Do Fake Reviews Pay?

There is no simple answer to whether fake reviews really do pay off for the business or person purchasing the reviews.  The fact that so many companies are engaging the practices of astro-turfing and carpet bombing indicates that these practices actually translate to tangible results.    Indeed, according to one study, 90% of consumers claim online reviews influence their buying decisions.  Meanwhile, a 2011 Harvard Business School study estimated that a one-star rating increase on Yelp translated to an increase of 5% to 9% in revenues for a restaurant.

The problem, then, is that there are huge benefits to behaving unethically but very little cost for those caught doing so.  While there is a growing emphasis on cracking down on fake reviews, the penalties, if caught, are not severe enough to deter most companies.  For example, Lifestyle Lift, a cosmetic surgery company, reached a settlement in 2009 with the State of New York over its attempts to fake positive consumer reviews on the Web and paid $300,000 in penalties.  Reverb Communications and one of its executives, Tracie Snitker, agreed to remove all of the iTunes reviews of its client’s games that appeared to have been written by ordinary people but were actually written by employees of the company.   The paid nothing.  Most recently, as part of Operation Clean Turf, New York Attorney General Eric T. Schneiderman announced in September, 2013 that 19 companies had agreed to cease their practice of writing fake online reviews for businesses and to pay more than $350,000 in penalties.  That comes to an average of less than $20,000 in fines per company.  That is hardly a slap on the wrist for many businesses.

Fake Reviews Revealed

On the other hand, while it can be beneficial, it can also be detrimental… if caught in the act.  Case in point.  Todd Jason Rutherford, a fake-reviewer-for-hire, exposed self-publishing guru John Locke – author of “How I Sold One Million E-Books” — in the New York Times for buying 300 fake reviews from Rutherford’s business, GettingBookReviews.  According to Rutherford, Locke spent about $6,000 for reviews.  To Locke’s credit, Rutherford said Locke did not care what the reviews said about his book, good or bad, but he did pay to have his book reviewed and asked that the reviewers purchase his book directly from Amazon so that it would appear as an “Amazon-verified purchase”, which would increase the review’s credibility.  It worked until Rutherford’s business collapsed when Google uncovered the nature of his business and stopped him from advertising his services with Google.  In turn, Amazon pulled many of Rutherford’s reviews from their system.  So Locke paid for reviews, many of which were ultimately pulled.  Not only that, once Rutherford was exposed, he turned around and exposed that Locke used his service.  This forever damaged Locke’s credibility as an author.  As if often the case, illegal or unethical actions might be lucrative in the short term, but the price is high for those who get caught.

Ultimately, business owners and managers need to understand that paying for reviews, even when the payment comes in the form of a discount or other incentive, is likely to be considered illegal in most states and more emphasis is being paid on the state and federal level to crack down on this problem.  In 2009, the U.S. Federal Trade Commission updated its endorsement and testimonial guidelines to better reflect the modern, digital world. A relatively broad reading of those guidelines indicates that any relationship between reviewer and the reviewed company — even an incentive relationship — should be disclosed. Doing otherwise could be illegal.

Quote of the Week

“Little progress can be made by merely attempting to repress what is evil; our great hope lies in developing what is good.” Calvin Coolidge

© 2013, Written by Keren Peters-Atkinson, CMO, Madison Commercial Real Estate Services. All rights reserved.

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