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Bogus Reviewers Do The Crime, Pay the Fine

Written by George Anderson

More than half of respondents in a July RetailWire poll said online reviews would become more important in consumer purchasing decisions over the next decade. As reviews grow in importance, the number of phony ones has grown as well. Gartner estimates that 10 to 15 percent of reviews will be phony by next year.

A 2009 FTC ruling established that paying for a positive review constitutes deceptive advertising if the company that hires the reviewer fails to disclose that information. New York's Attorney General office recently sued 19 firms for more than $350,000 in fines for posting phony reviews that violated that state's laws against false advertising.

The practice of posting phony reviews, also known as "Astroturfing", has become a big business. According to the NY AG's "Operation Clean Turf" investigation, the firms paid freelance writers from the Philippines, Bangladesh and Eastern Europe $1 to $10 for each review they wrote.

"Consumers rely on reviews from their peers to make daily purchasing decisions on anything from food and clothing to recreation and sightseeing," New York Attorney General Eric Schneiderman said in a statement. "This investigation into large-scale, intentional deceit across the internet tells us that we should approach online reviews with caution. And companies that continue to engage in these practices should take note: 'Astroturfing' is the 21st century's version of false advertising, and prosecutors have many tools at their disposal to put an end to it."

A good review on a site such as Yelp can generate sales for companies. USA Today cited research by a Harvard Business School assistant professor, Michael Luca, which found a one-star increase in a Yelp rating can lead to a five to nine percent jump in revenue for a company.

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