Online reviews have a significant and quantifiable impact on purchase decisions. Any business owner knows that your most authentic and impactful advocate is a happy customer, and technology has made every customer’s voice extremely powerful.
As consumers we have become increasingly reliant on online reviews to make purchase decisions, businesses are also becoming reliant on the exponential sales impact user reviews generate.
Over 90% of shoppers read online reviews before making a purchase and with Aussies spending almost $7.6 Billion on online sales over the Christmas period alone in 2019 (an increase of 3.7% from the previous year) reviews influence Australia’s GDP.
Online reviews impact how people spend, where people and when they spend. Often Australian manufacturers and retailers are disadvantaged by large global players who manipulate reviews to beat arguably the better local product. According to Shopify, 57% of online shoppers make purchases from overseas retailers. This manipulation sees large amounts of money flow out of Australia at the expense of local markets and the overall economy.
This is a global problem, not just limited to Australia and currently there is no authoritative method or reliable model anywhere in the world that can determine whether a review is authentic, fake or artificial. Consumers are urged to practice caution but very little education has been invested and research by the University of Sydney indicates that consumers overestimate their ability to identify a fake review.
What is a Fake Review?
A fake review is content that aims to mislead consumers about the credibility of a product through fabricated or coerced feedback. Reviews can be broadly categorised into two distinct groups: Fake positives and Fake Negatives.
“Fake positives” are the glowing reports that bear no resemblance to reality. For example, the amazing headphones that fall apart in your hands opening opening or the Sunset Beach Views of a hotel that backs onto a car park 20km from the beach. Fake Positives are designed to manipulate the consumer into a buying decision.
“Fake negatives” are content that influence your decision to stay away from the product or service being reviewed. Often initiated by unscrupulous competitors, Fake Negatives can being a business to its knees. A restaurant just needs a few fake reviews mentioning “cockroaches” or “unsanitary kitchen conditions” and business will noes dive. They are written to damage a company’s reputation and generally go on to recommend a different product from a competitor.
Neither positive nor negative fake reviews are based on reality. They are designed to manipulate consumers and profit from their deception.
The Review Ecosystem
The online review industry is massive with thousands of players representing a plethora of industries and niche markets, reviewing everything from products, brands, employers to experiences.
The top Four that would have the biggest impact on consumer behaviour is Google, Facebook, Amazon and Ebay. Australians engage with these sites at fanatical levels. Ebay.com and .com.au receives almost 1Billion visits from Aussies annually, Amazon 320Millon Facebook interacts with 15Million Aussies on a monthly basis and Google receives thousands of visitors a minute from Aussies searching online.
There are also large established players in specific verticals, for example in travel we have tripadvisor.com, hotels we have hotels.com, bookings.com etc and Restaurants we have Yelp etc.
Each site has their own review methodology. With Amazon you can write a review and leave a star rating – which is the most common review method. Facebook you can choose yes or no to recommend a business and also add a review. Ebay gets quite granular and goes into detail such as Did the item arrive on time and then asks you to rate whether the experience was positive, negative or neutral and finally you provide a rating to several aspects of the transaction that provide an overall star rating.
Some Review platforms require proof of purchase, such as ProductReview.com.au but this is not mandatory but provides consumers some confidence on the authenticity of the transaction. However, it does not address the issue of artificial reviews: where business provides incentives in exchange for reviews.
Reviews impact all Industries, but some of the more well known industries impacted include:
- Online Retail – it is estimated that 90%+ of shoppers use reviews and recommendations to shape their buying decision.
- the Hospitality Industry – 33% of people won’t dine at locations with less than a four-star.
- the Healthcare Industry – Given the importance of healthcare over half of us will review healthcare professionals before choosing a provider. It is not surprising that over 85% of GPs now monitor their reviews online.
- Finance and Banking – 1 in 5 people have said that they made financial decisions based on reviews and recommendations of credit cards and banking products.
- Automotive – 91% of consumers rely on review when selecting a dealership and car shoppers are 5.3 more times likely to convert into a lead when dealers have positive online reviews.
Types of Fake Reviews
Fake review can be classified in four distinct categories: DIY fake reviews that are created and published by business owners themselves; Purchasing fake review on any number of online vendors (five 5 star reviews cost as little as $10 each); Soliciting fake review writers via social media user groups and incentive programs where brands offer cash and product incentives to customers who leave positive reviews
DIY Fake Review – This is pure trickery and the most simple of fake reviews. Most people get fake business reviews using VPNs that help them cover their tracks. Next, they create a multitude of email addresses. They then write fake reviews on their own eBay, Amazon, Facebook or Google business listing often giving glowing fake feedback.
Last year, Skin care brand Sunday Riley settled with the Federal Trade Commission (FTC) who accused the company of posting fake Sephora reviews for 2 years, starting in 2015.
The FTC alleged that in order to boost sales, Sunday Riley staff were asked to write positive reviews of products and dislike negative commentary.
An employee leaked an email from founder and CEO Sunday Riley onto Reddit, ironically titled ‘Credibility is key…’ that went into a lot of detail about how to create fake Sephora accounts and post “glowing reviews” of their products. It even provided details on how to instal a VPN to mask the company’s IP address. It boosted their ranking significantly at the expense of other brands that would have amounted to a lot of revenue.
Purchasing Fake Reviews – Just type in ‘purchase 5 star review’ into Google an there will be thousands of results served. Alternatively you can hire agencies who specialise in fake reviews on crowdsource sites such as freelancer.com or fiverr.com. There are thousands of people on these platforms who specialise in creating fake reviews for businesses!
Facebook Communities / Groups – It estimated there are hundreds of groups recruiting writers for fake or incentivised reviews. Which? researchers joined scores of Facebook review groups during its investigation and found 3,511 new posts had been generated in just one day – and more than 55,000 in a month.
Review for Incentive – There are facebook communities and websites that specialise in non-monetary incentives for leaving positive reviews. Often individuals are sent products to review or given discount codes in exchange for reviews. We call these artificial reviews because the only reason a review is being given is in exchange for a reward.
An example of Review Incentive Programs is a company called UrthBox who provide subscriptions for healthy snacks. In 2017, the company had a review incentive program in which representatives of UrthBox asked consumers to write a positive review about the company on the Better Business Bureau (BBB) website. After writing the positive review that was verified by UrthBox, free snack box was sent to the customer and representative who told the customer about the incentive was awarded a “cash bonus.”
How Big is the Problem
Amazon – A Washington Post study found that 61 percent of products such as electronics reviews on Amazon are ‘fake’. Paid or fake reviews rampant on Amazon. According to an analysis there are certain categories that have an alarming high percentage of fraudulent or paid reviews, from weight loss pills to electronics to testosterone boosters.
Tripadvisor – UK consumer group Which? Travel analysed a total of almost 250,000 reviews for the 10 top-ranked hotels in 10 global tourist destinations, from Las Vegas to Cape Town. It found that one in seven of the hotels had “blatant hallmarks” of fake reviews, with others raising “serious concerns.” As online reviews influence an annual estimated £23 billion ($28 billion) of booking transactions in the UK alone, according to the UK government, this is a significant problem.
Google Reviews – Google Reviews have received a decent amount of publicity of late. Fake Google reviews often take the form a Fake Negatives. In July 2019, Google faced contempt of court charges in the New South Wales supreme court after it failed to immediately follow a court order to take down damaging reviews about an unnamed Sydney businessman. In late June, the NSW supreme court ordered a woman to pay $530,000 in damages to a cosmetic surgeon over a misleading review she left. The review was online for three weeks until the doctor took her to court. He reported a 23.61% drop in visitors to his website a week after the first negative review was posted.
Facebook Reviews – As mentioned, Consumer Group Which? researchers joined scores of Facebook review groups during its investigation and found 3,511 new posts had been generated in just one day – and more than 55,000 in a month. Facebook is not only flooded with fake reviews but is also a marketplace to buy and trade in fake reviews.
Is Australia doing enough?
Countries like the US and the UK are investing resources into addressing the issue. While no one has applied breakthrough Machine Learning science to address the issues, Governments are certainly looking at addressing the issues from a regulatory perspective.
The UK’s Competition and Markets Authority (CMA) estimates fake reviews potentially influence £23bn of UK customer spending each year
The CMA has launched a program of work after a lengthy investigation into fake reviews determined that they potentially influence around £23 billion of UK consumer spending each year. It says millions of shoppers consult reviews before booking holidays and buying products or services but found that some companies were buying reviews or paying third party agencies to write fake reviews about products and services.
The 2008 Consumer Protection from Unfair Trading Regulations forbids this practice. The CMA says,
It is a banned practice to use editorial content in the media to promote a product where a trader has paid for the promotion without making that clear in the content or by images or sounds clearly identifiable by the consumer. It is also a banned practice to falsely claim or create the impression that a trader is not acting for purposes relating to his trade, business or profession, or to falsely represent oneself as a consumer.
The CMA says that the use of fake reviews is a concern due to the volume of adults relying on reviews to make purchase decisions and the amount of money at stake. Fake reviews also pose additional problems in that they mislead consumers to spend money with a business or on a product they may not have otherwise chosen. This could mean other businesses are losing out on revenue they may have earnt, had it not been for the fake or misleading reviews.
For some sectors, fake positive or fake malicious reviews have a bigger impact – findings from the CMA suggest small businesses in the hospitality sector in particular are badly affected by fake reviews.
Cherry-picking or suppressing negative reviews can also mislead consumers and affect the ultimate purchase choice.
Breaking the Law – But Prove it…
In Australia, Businesses and review platforms that do not remove reviews that they know to be fake risk breaching the Competition and Consumer Act 2010 (CCA). According to the Law, Reviews may mislead consumers if they are presented as impartial, but were written by:
- the reviewed business
- a competitor
- someone paid to write the review who has not used the product
- someone who has used the product but written an inflated review to receive a financial or non-financial benefit.
Businesses that offer incentives to those who write positive reviews risk misleading consumers and breaching the CCA. Incentives should only be offered in exchange for reviews of your business (its products or services) if:
- incentives are offered equally to consumers likely to be complimentary and consumers likely to be critical, and positive and negative reviews are treated the same
- the reviewer is expressly told that the incentive is available whether the review is positive or negative
- the incentive is prominently disclosed to users who rely on affected reviews.
Summary
Fake reviews can be economically crippling at a micro and macro level. A product can be a best selling item not because it is the best quality or the most competitive, rather through simple manipulation of the review system. This impacts good business at a micro-level by denying them the income they would have otherwise won, and the economy at a macro level by altering dynamic and behaviour of how markets normally work.
Australian business should familiarise themselves with platforms fake review policies and their rights under Australian law for redress where a fake review has been identified. It is also important to understand how the fake review industry in order to monitor fake reviews that couple impact your business. Stay vigilant, monitor for fake reviews and know your rights.
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