E-Commerce: How The 'Fake Review' Economy Works

As e-commerce grows globally, online reviews have acted as certificates of authenticity that allow potential customers to size up products or services against each other.

Information asymmetry is a massive issue in any transaction since the seller or service provider is aware of the issues with the product, but the customer isn’t.

Especially in the case of a new product, or an unknown brand, it is difficult for buyers to verify the authenticity of the seller’s claims and reviews help lower the information asymmetry.

Even as the Internet was just starting off, there were numerous sites dedicated to collating user reviews of restaurants, products, places, professionals etc, that would allow. In the online world, reviews act as a substitute for word-of-mouth marketing.

Reviews especially play a big role if the market is competitive with many sellers offering similar products, and branding doesn’t offer much of an advantage. If one were to quantify it, as one consultancy research did, product sales went up by 25 per cent for a one-star increase in product rating.

Since algorithms on e-commerce platforms give a significant weightage to reviews when displaying products, all products with good reviews are usually displayed at the top.

In addition, customers look at higher-rated products in order to make a purchase decision. Hence, products with bad ratings, or products with a lower number of ratings have a lower probability of being bought by customers. But, like with all systems, sellers have found a way to fool algorithms and customers.

These players have resorted to displaying fake reviews on their products in order to attract customers. As algorithms are servile to data, these products receive a higher ranking attracting more eyeballs and ultimately customers. Users are also likely to pay up more for a product with a higher number of positive ratings, rather than going for a cheaper product with lower ratings.

Given the dynamics of the marketplace, large players get larger since they have more visibility, while smaller players struggle to keep up. Users too are often more likely to buy products with a higher number of positive reviews.

As a result, players who play dishonestly could do much better than honest players. The fake review industry is growing, with agencies offering their services to bump up the number of reviews for products sold on online platforms.

These agencies hire people to buy products from the seller, who then refund the amount after the (fake) customer writes a positive review. The hiring is usually through freelancer sites, social media groups, internship sites etc.

These agencies then sell review packages to companies who are looking for ways to prop up their sales, and reviews are seen as a one-time investment to launch the product. A German company reportedly sold 1,000 reviews for $10,000. Other agencies operate as “free product” sites, that offer deals to sellers while offering 100 per cent cashback to buyers who register on the platform and supply free reviews.

On the other hand, some sellers use indirect means to bump up their reviews. For instance, a listed consumer products player in India has brochures put into each box of their product. These brochures contain promises of “cashback” if the customer gives a high rating to the product, and sends a screenshot on the company’s WhatsApp account. A similar strategy is followed by many businesses across various products on online platforms.

However, these reviews are not limited only to marketplaces but are rampant on prominent listing platforms as well. Google Listings allows businesses to list themselves, and customers to review the business. Since most of us use Google to find local businesses, some agencies have begun providing fake reviews for Google Listings as well.

One can find several listings in every city with hundreds of positive reviews. While it might be impressive at first look, a closer look might help you discern between genuine and fake reviews. Quite often, an agency uses the same account for reviewing multiple customers — as a result, most accounts would have positive reviews for the same listings.

According to the World Economic Forum, people spend around $152 billion on products with fake reviews, since it estimates that 4 per cent of all online reviews are fake. Though tech behemoths have been working on the issue of fraud prevention and fake reviews for ages, it remains rampant.

Detecting if a review is false is tough, and combing through millions of reviews and removing these reviews can be tougher. Fake reviews can sour consumer experience, which ultimately could affect the marketplace’s own reputation and revenues — making it necessary for these organisations to cull such reviews.

In a blog post, Amazon had previously asked other social media companies to help it keep fake reviews under control by keeping a lookout for social media groups that are used to perpetuate fake reviews. Facebook and Telegram are often used by fake review generators to attract reviewers by offering “free merchandise”.

Yelp and Google have been working on various ways to curb fake reviews, and Google even put 100,000 businesses under protection in 2021, over suspected fake reviews. In a reverse scenario, businesses could potentially be on the receiving end of negative reviews by competitors and blackmailers.

In recent years, there has been an increase in extortion cases with criminals asking for money in exchange for them not putting up negative ratings for a business or a product.

The Indian government is looking to curb the fake review problem and has been talking to stakeholders regarding the issue. It plans to introduce a framework to curb fake reviews, in order to protect consumer interest. Usually, the vulnerable audience for such fake reviews is the set of people who are less tech-savvy, making it even more necessary to stop fake reviews.

This article was first published here.