By Randy Hutchinson
President of the BBB of the Mid-South
Reprinted from The Jackson Sun
The FTC has sued over 20 companies in the past four years alleging they violated its guidelines for using reviews and endorsements to promote their products and reputations. Online retailer Fashion Nova was assessed a $4.2 million fine to settle charges that it suppressed product reviews that were less than four out of five stars.
The FTC sent notices to over 700 companies in late 2021 warning them about deceptive practices in gathering and publishing reviews, endorsements and testimonials. It didn’t accuse any of them of wrongdoing specifically, but the actions it cited were the focus of past enforcement actions.
In May of this year, the agency announced its intentions to strengthen its guidelines against fake and manipulated reviews. Businesses shouldn’t ask for reviews only from people they think will leave positive ones and shouldn’t prevent or discourage people from submitting negative reviews. If businesses offer consumers an incentive to file a review, receiving the incentive shouldn’t be conditioned on the review being positive.
The Director of the FTC’s Bureau of Consumer Protection said, “Whether it’s fake reviews or influencers who hide that they were paid to post, this kind of deception results in people paying more money for bad products and services, and it hurts honest competitors.”
Filing fake reviews violates the BBB’s Accreditation Standards. In August, the BBB headquartered in Dallas revoked the BBB Accreditation of a property management company whose employees filed what the BBB believes were dozens of fake positive reviews about the company.
Fake positive reviews may be filed by company employees, family members, marketers, and even overseas “content farms.” Fake negative reviews may be filed by competitors, disgruntled ex-employees, and customers hoping to get a refund, discount or other benefit.
How serious is the problem of fake product and company reviews? In an article on Renolon.com, Yaqub M. cites these statistics:
- 82 percent of consumers have read a fake review in the last year.
- 30 percent of Online Customer Reviews Deemed Fake.
- Fake online reviews cost $152 billion a year.
- 61 percent of reviews for electronics on Amazon are fake.
What’s the incentive to file fake reviews? A Harvard Business School study found that an extra star on a restaurant’s Yelp rating can increase its revenue by up to 9 percent. A Tennessee legislator introduced a bill earlier this year that would prohibit filing a fake review after hearing about a Nashville painting company that almost went out of business when nearly 700 fake reviews were filed about it in just one year, all prompted by a competitor. Many consumers make purchases based on the recommendation of influencers who don’t follow FTC guidelines for endorsements.
The BBB recommends you watch out for these red flags that a product or company review may be fake:
- The reviewer has a very common or generic name like John Smith or Jane Doe, with no profile picture.
- Multiple, similar reviews posted in a short period of time.
- Glowing praise with no supporting detail.
- Grammar and spelling errors suggesting sellers have outsourced creation of reviews to overseas content farms.
- Industry jargon and descriptions of features and benefits rather than the reviewer’s experience with the product or company, suggesting an insider has filed the review.