The legal challenge that could make fake reviews a thing of the past

A legal case in the US is taking a new approach to trying to eradicate fake customer reviews on sites like Amazon and TripAdvisor.   

Fake reviews are damaging customer experience.   

Fakespot, a website that ID’s fake reviews, estimates that around 30% of product reviews on Amazon aren’t genuine. Yet our trust and faith in online reviews is unwavering. The UK government's Competition and Markets Authority (CMA) estimates that customer reviews potentially influence £23 billion of customer spending in the UK every year.

In a landmark case, the US Federal Trade Commission has decided to take action by penalising the companies paying for the fake reviews, rather than the fake review providers themselves.     

In the challenge, which involves a $12.8m settlement, a dietary supplements firm called Cure Encapsulations managed to advance its product ratings by using a specialist company to provide fake, but ‘verified’ reviews on Amazon.  

The supplements and their claimed weight loss benefits were considered debatable, according to a press release announcing the federal case, and were in some cases revealed to be connected with liver failure.

Yet  the company’s founder was able to catapult the product up its relevant rankings by hiring amazonverifiedreviews.com to write fake 5-star reviews for a fee.        

In 2015, Amazon sued 1000 unnamed users for posting fake reviews via Fiverr, saying that its brand reputation “was being tarnished by ‘false, misleading and inauthentic’ reviews”.

How can customer reviews help?

Reviews have become an increasingly valuable tool to drive purchases in recent years. 

Research has revealed a strong correlation between the number of online reviews a product has and its sales performance - even if some of the reviews are negative. 

The report Assessing the Impact of Ratings and Reviews on E-commerce Performance examined product performance on ecommerce sites, and found that when a product with no reviews adds even a single one, that product receives an average 108% traffic lift and a 65% increase in conversion rate.

The study also indicates that the best-selling products in a category – those in the top 10 – each tend to have more reviews than products among the top 100 in the category as a whole, many with double or triple the number of reviews. 

Richard Anson, founder of Reevoo, notes: “It’s no secret – reviews persuade people to buy products and services. That’s why there are businesses risking fines and legal action to fake good ones. But in reality, this fakery is incredibly counterintuitive and in the long-term is more likely to lead to lower sales and brand damage.”

Customers value authenticity above all, and Anson suggests that trust is being broken down from three directions:

• By the (usually small) marketing agencies willing to write fake reviews for clients.
• By the businesses willing to do whatever it takes to look good online.
• And by the platforms who facilitate the process by letting anyone write a review.

What are the best practices for using customer reviews?

So with online reviews having become such a powerful part of today’s shopper journey, how can brands take advantage of influential online reviews without compromising customer trust, and ensure they are following the correct – and lawful – procedures?

Theresa O’Neil, formerly of PowerReviews, has shared the following advice:

Fake reviews

• The authenticity of reviews is what makes them so powerful. Fake reviews mislead customers, it’s as simple as that.
• Make sure both negative and positive reviews are checked for fraud otherwise only false negative ones will be removed.
• Publish all genuine reviews – and ensure your review collection procedure allows this.
• Ask your reviews supplier how it weeds out fake reviews; you need to be confident in how they operate. 

Paid-for reviews

• Endorsements are not illegal and can help you sell your product – but the issues arise when you fail to disclose the relationship.
• If you’re paying for it, whether through sponsorship, advertising or any other commercial arrangement, declare it.
• Incentivising is a great way of collecting more reviews – but you should disclose the incentive and post all reviews, positive or negative reviews.

Responsibility

• Adhering to online review practices isn’t just a ‘nice to do’. If you fail on any of these counts, you may be in breach of the Consumer Protection from Unfair Trading Regulations 2008.
• Consumers trust reviews. And it’s the responsibility of brands and retailers to provide authentic content that consumers can trust. Aligning with the right reviews technology partner can help you not only drive traffic and sales, but also build and preserve trust with shoppers.

Negative reviews

• Regulations forbid brands from censoring negative reviews – but they’re not something to be scared of. Research found that consumers specifically seek out negative reviews. Negative reviews show that brands have nothing to hide.
• Perfect ratings are perceived as too good to be true. Research also found most conversions aren’t driven by a 5 star rating; a product is most likely to be purchased if its average star rating falls between 4.2-4.5. Most people are savvy enough to discount overwhelmingly positive reviews as biased.
• Negative reviews can help brands identify better ways to serve their customers and improve their products. One of PowerReviews retailer clients had a watch on their site with a low rating. A closer look revealed many consumers commented that the clasp of the watch loosened quickly. The company worked with their manufacturer to improve the clasp, and the new version of the watch had a much higher rating.