How Policymakers Can Thwart the Rise of Fake Reviews
As businesses compete for customers in the digital economy, some use deceptive tactics to manipulate consumer reviews about their goods or services, or those of their competitors, including by posting fake reviews. These fake reviews can damage honest companies’ reputation and deceive consumers into purchasing goods or services of substandard quality.
Introduction
Online consumer reviews play two important roles. First, reviews can inform consumers about the quality of products and services and the reputation of companies. Second, online reviews give companies information they can use to improve or modify their offerings. By receiving feedback from customers, companies can further develop products to match market trends, rectify any issues with their goods or services, and monitor the quality of their handiwork.
Consumers heavily rely on online reviews when determining whether to purchase a product or service. In 2021, 77 percent of U.S. consumers always or regularly read online reviews when browsing a local business. And these reviews matter: Just 3 percent of U.S. consumers would patronize a business with an average of two or fewer stars (out of five). Consumers depend on reviews to inform their purchases, and companies depend on reviews to entice consumers to choose their offerings over a competitor’s.
The importance of online reviews has opened a new market for fake reviews that present a dishonest impression of companies, goods, and services. Companies may turn to employees or bad actors to fraudulently leave positive reviews to boost the image of their products, or negative reviews to discredit those of a competitor. These actions both hurt honest businesses and mislead consumers as to the quality of relevant goods and services.
To address this problem, policymakers should take the following steps:
First, the Federal Trade Commission (FTC) and state attorneys general should combine their investigations and heighten enforcement actions against the actors pursuing or posting fraudulent reviews. Penalties on companies that solicit fake reviews or those that post them should significantly outweigh any monetary benefits they expect to gain. Creating stronger enforcement would deter more parties from pursuing fraudulent reviews.
Second, the FTC should work with review websites, e-commerce sites, and consumer brands to develop best practices for combating fake reviews. Collaboration between these parties would allow all involved to better prevent and detect fraudulent reviews. In addition, the FTC should form a public-private partnership with private sector stakeholders to share data related to known bad actors to improve automated detection techniques and make it easier to identify bad actors using shared data from many platforms.
Third, the FTC should work with the private sector to create best practices for social media companies to address fake reviews. Bad actors frequently use groups on social media to coordinate posting fake reviews. Social media companies could use the best practices as a guide on how to identify and remove more fraudulent activities. Further, smaller social media companies that may not have the same resources as those available to larger organizations could use the best practices to stem the proliferation of fake review offerings on their platforms before bad actors establish themselves.
Finally, policymakers should enact legislation to protect consumers who leave honest reviews from lawsuits (a type of lawsuit known as a strategic lawsuit against public participation, or SLAPP). In pursuit of positive online recommendations, companies often retaliate against consumers who leave negative reviews of their goods or services. Laws protecting consumers from such actions would preserve the integrity of their reviews and ensure that reviews of goods and services remain reflective of their quality.
Read the report. (PDF)
