How Fake Reviews Hurt SMBs and What One Online Giant Is Doing to Fight the Problem

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–by SMB Group’s Kelly Teal, Contributing Analyst, and Laurie McCabe, Co-founder

No one likes fake reviews. Who wants to spend money, only to have a product or service fail to live up to expectations? But many people don’t realize how pervasive phony reviews have become. The issue came to the forefront of SMB Group’s attention after co-founder Laurie McCabe briefly discussed it on LinkedIn a couple of weeks ago. The reaction to the post surprised us: LinkedIn News picked up the post, and as of the time of this blog’s publication, 60,000-plus people had viewed it, likes were closing in on 600, and comments had surpassed 110.

Several key takeaways emerged from the news and responses: Fake reviews are big business, they’re bad business, and they plague both consumers and the millions of small and medium businesses (SMBs) that sell on third-party ecommerce platforms such as Amazon.

Fake Reviews Are Big Business—and a Huge Problem

Last year, CHEQ, a cybersecurity company that specializes in customer acquisition security, teamed up with the University of Baltimore to figure out how many online reviews qualify as fake, and to put a dollar figure on their influence. The numbers might surprise you. Among sites including Amazon, Trip Advisor, TrustPilot and Yelp, 4% of reviews emerged as fraudulent. These fraudulent reviews influence about $152 billion in worldwide ecommerce spending each year, with about $28 billion of that coming from the U.S.

Fake reviews are clearly a big business for the people that perpetrate them. According to the CHEQ study, fake reviews are created and sold via underground markets. They may be written by people, or by bots that infiltrate paid search and social media campaigns. For instance, Amazon investigators have uncovered review brokers with more than 900,000 collective members willing to write fictitious reviews.

These operations employ people to leave hundreds of fabricated, five-star reviews each day, paying between 25 cents to $100 per review. Operators often also encourage reviewers to buy the item they’re reviewing, then reimburse them for it and allow them to keep it.

For consumers, the results can be infuriating. A 2021 survey by Consumer Reports found that 239 million Americans read online reviews before making a purchase decision. Storefronts that pay for bogus five-star reviews rise to the top of ranking lists, potentially luring customers into buying something they thought would deliver five-star satisfaction, but resulting in a subpar experience.

The problem hurts legitimate SMBs as well. Storefronts buying the fake five-star reviews rise to the top of rankings lists, edging out authentic sellers and potentially taking business from them. And, when buyers figure out that they’ve been duped by fake reviews, it diminishes their trust in buying from smaller brands that they’re not familiar with when they’re ready to make another purchase. In a nutshell, everyone suffers. Except, of course, the scammers who are raking in the cash.

What’s Being Done?

Online ecommerce giants are becoming more vigilant when it comes to monitoring for fake reviews, and are putting new programs in place to crack down on them when they can verify that reviews are false. After all, they have a lot at stake too. These vendors use honest reviews to track and analyze customer sentiments, preferences, satisfaction, experiences, trends, and more. In addition, if legit SMB (and larger) merchants withdraw from their platforms, or customers stop shopping on their platforms, they lose money. They are also facing increased government scrutiny against the use of fake reviews and misleading endorsements, and the prospect of penalties for those involved in these practices.

As discussed at the start of this post, Amazon is doubling down on efforts to remove fake reviews—and the bad actors that perpetrate them. In addition to providing a tool for legitimate sellers and customers to report fake reviews and other fraudulent activity, Amazon runs a Customer Trust team that monitors for fake reviews to verify and shut down scam operations.

Amazon employs more than 10,000 people worldwide to monitor, track, and pursue fraudulent activity, including fake reviews. It also relies heavily on machine learning algorithms to deliver insight into patterns, making it easier to spot the fakes.

Once it detects fraud, Amazon will sue companies that it alleges are responsible for fake review brokers. In February 2022, Amazon filed lawsuits against AppSally and Rebatest, alleging that they paid 900,000 people to leave fake reviews in exchange for money or free products. Amazon is currently trying to shut down AppSally and Rebatest, just like it closed two other fake review sites in Germany and the U.K. late last year.

Amazon says it stopped more than 200 million suspected fake reviews from appearing on its site in 2020 (the vendor has yet to release this number for 2021). In addition, Amazon reported over 16,000 abusive groups to social media sites such as Facebook, Twitter, and Instagram in 2021, resulting in groups with over 11 million members being taken down by these social media sites.

Amazon also has a Counterfeit Crimes Unit comprising former federal prosecutors and FBI agents, data analysts, and other experts. That group recently raided a warehouse in China suspected of housing fake products for sale. Amazon created that particular team after it weathered some pretty significant criticism about opening up to Chinese sellers, who are widely known for peddling knock-off versions of brand-name products as the real deal (think Italian purses, shoes and the like). Amazon monitors for such illegal activity and moves quickly to shut down these operations as well.

Other major ecommerce platform vendors, including Walmart, eBay, Yelp are also putting measures in place to fight bogus reviews and the companies behind them. For instance, Yelp’s review solicitation penalty penalizes businesses for “asking friends, family or customers to write reviews, offering incentives or freebies in exchange for reviews; or working with companies that send review solicitation emails.” Yelp relies on internal algorithms to assess fraudulent reviews, and if it discovers that a business is systematically soliciting reviews, it applies a search ranking penalty to affected Yelp business pages. If a business takes manipulation to inflate its search ranking by soliciting or purchasing reviews to the extreme, Yelp will put a Consumer Alert on the business’s Yelp page.

Perspective

Customers who shop online rely on reviews to make buying decisions. When fake reviews diminish trust, it makes it harder for honest businesses to use authentic reviews to attract customers. All of the major ecommerce platform players have a lot at stake as well.

Because of its size and influence in the ecommerce sphere, and the intense scrutiny it faces from government watchdogs around the globe, Amazon appears to be leading the pack when it comes to combatting fraudulent reviews and brokers.

Unfortunately, combatting large-scale fake review operations is a bit like playing whack-a-mole. No one vendor or single silver bullet can solve the problem. Amazon and its cohorts will need to continue to strengthen and accelerate efforts to tighten the screws on the fake review industry, put brokers out of business, and provide better protection for consumers and SMBs.

This post was sponsored by Amazon.

Source: Laurie McCabe’s Blog

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