News & Analysis

Fake reviews: Desperation leading to fishy business

- December 13, 2013 3 MIN READ

The Australian Associated Press (AAP) recently distributed an interview with Murray Deakin, Partner at K&L Gates conducted by BRR Media. The subject of the interview was Australian Competition and Consumer Commission’s (ACCC) new set of guidelines that target fake online reviews.

Fake reviews and testimonials aren’t a new phenomenon, but they’ve become increasingly widespread in the online space. In fact, there are plenty of sellers on online marketplaces like Fiverr offering to write “glowing reviews” of anyone’s product or service for $5. If you look at the feedback section of Fiverr below a particular seller’s offering, you’ll notice that quite a few people are paying for this service.

While this is ethically suspect, to say the least, it’s not always in bad faith. In a conversation several weeks ago, a startup founder admitted his struggle to get his application off the ground. Out of desperation, he started paying people to submit positive reviews on websites such as Product Review. What was particularly disheartening was how he considered himself a “serially failing entrepreneur”. However, everything was expressed in a tone of humour; and according to this founder, it’s what many other startups do to augment their speed of success.

Many studies, including the 2011 Harvard Business School study and 2012 Cornell University study, indicate a direct correlation between positive reviews and increased revenue. The Harvard study found that a one-star increase in rating on Yelp.com leads to 5 to 9 percent increase in revenue; while the Cornell study found an 11.2 percent increase in revenue for hotels featured on Travelocity.com receiving one point extra in a scale of one to five.

But in today’s digital environment, consumers are increasingly falling victim to deception. There’s a stark change in the way consumers buy today compared to the pre-internet era. They’re savvy in that they make sure a product is worth buying prior to making a purchase – particularly if it’s online. But there isn’t much of an option but to rely on opinions presented on review websites, which can just as easily be disingenuous.

There are many articles teaching the consumer “how to spot fake reviews”, but deceptions have become sophisticated. No matter how smart a consumer you are, there is no way to  tell exactly when a review is false – especially when you care enough about a product to check reviews.

In an article in The Conversation, Professor of Law at Monash University writes, “filters, assumptions, biases and outright distortions are built into search engines and into the site’s presentation of information in ways that users can never detect.”

As such, it is great news that the ACCC has intervened. Their new set of guidelines aim to reduce the risk of consumers being deceived by online review platforms such as Trip Advisor, Product Review, and Urban Spoon.

According to Mr Deakin, the guidelines are directed at “websites that … collect and republish consumer comments and criticisms and praise in respect to a whole variety of goods and services” that are now expected to take the responsibility of “ensuring that consumers who log on to these websites are not misled by fake reviews and are able to reach better informed decisions on the limitations and risks associated with various products and services”.

Essentially, there are three things that can’t be done:

  1. Businesses can’t pay any third-party to write positive reviews of their products or services;
  2. Businesses can’t post fake reviews of its own business or any competitor’s business; and
  3. Websites can’t publish positive reviews of a business due to a commercial relationship with that business.

While these guidelines are critical, especially at a time where a growing number of consumers are buying products and services online, it probably won’t succeed alone in combating deceptive conduct because they’re not mandatory legal requirements. Then again, it’s always difficult to regulate online behaviour because there are no geographical boundaries.

Mr Deakin adds in the interview that “the guidelines are limited in their application to Australia whereas a number of online review platforms are based offshore and outside the ACCC’s jurisdiction and also the guidelines do not address a number of misleading features of online review platforms which is a little disappointing.”

“For example no account is taken of the fact that only some consumers post reviews, some may be inflamed to post a negative review, but the vast bulk of customers never post any reviews and so there’s a question as to how reliable these review platforms are, are they necessarily representative of the relevant class of consumers and are you getting an accurate picture of the product or service in question by reviewing those consumer posts.”

So then what’s the point? It’s a start.

Image source: www.alglaw.com