- October 4, 2013
- Posted by: Seth Heyman
- Categories: Internet Law, Marketing & Advertising Law
The New York Attorney General Eric T. Schneiderman recently announced a settlement with 19 companies charged with posting fake online reviews for businesses. The settlement came after a year long undercover investigation, which revealed that the companies had flooded the Internet with fake consumer reviews on sites such as Yelp, Google Local, and CitySearch. Many of the companies charged used techniques such as creating fake online profiles, and paying freelance writers from such exotic ports of call as the Phillipines, Bangladesh, and Eastern Europe $1.00 to $10.00 per review. The companies were required to pay $350,000 in penalties, and to cease the prohibited conduct.
The practice of establishing false online identities to post fake reviews is known as “Astroturfing;” which takes place when the sponsors of a message disguise themselves as disinterested third parties in order to give their statements the appearance of credibility. Astroturfing also occurs in the context of political advertising. It should come as no surprise that the term “astroturfing” is derived from AstroTurf, a brand of outdoor carpeting intended to look like natural grass (but which actually bears no resemblance to it whatsoever).
The astroturfing engaged in by these companies violates multiple state laws against false advertising and illegal and deceptive business practices, but also underscores the enormous power of peer reviews when it comes to making any sort of purchase decision. Research indicates that 90% of consumers say that online reviews influence their purchasing decisions and that increases in ratings on Yelp or similar cites translates directly into increased revenue. This helps explain the explosive growth of the online reputation management industry.
Companies often seek out reputation management services when they want to overcome negative online reviews, and one clear way to overcome negative reviews is by overwhelming them with positive reviews. Thus, “reputation management” is really advertising under another name, and advertising has its risks. Indeed, the FTC addresses this fact in its Endorsement and Testimonial Guides, and in enforcement actions against Legacy Learning Systems, and Reverb Communications.
When false positive reviews translate to real dollars, the temptation to engage in the practice is strong, even in the absence of negative reviews. And, if negative reviews are crushing your revenues, the temptation is stronger still. After all, the fewer reviews a company has, the more impact a negative review will have on its bottom line. These enforcement actions should assist in overcoming that temptation, but what is an honest businessperson to do when negative reviews are themselves fake, published by a disgruntled ex-employee or anyone else who bears an illegitimate grudge against the owner?
Review sites such as Yelp, in which users can anonymously post scathing reviews, empower such people to an extent never imagined in the days before the Internet, when the only way to have a similar impact would be to march in front of the establishment bearing a sign expressing one’s dissatisfaction. Users of review sites definitely have an advantage, even those whose opinions are somewhat less than sound sensible; sometimes way, way less. For some truly hilarious examples, check out the blog Yelp Review Reviews.
If you’re the target of an irrational reviewer, the best way to fight back is to manage your own reputation, rather than hire an unscrupulous third party to do it. Most review sites offer this sort of assistance to businesses free of charge, such as Yelp’s Support Center.