The Problem: The research firm Gartner has estimated that by 2014, 10% to 15% of all online reviews will be fakes. The fake user and fake review markets are booming in sites such as Craigslist and Fiverr.com, where somebody offers to write a negative or positive review for only $5.
This underground market of fake users and reviews undermines the whole concept of crowdsourcing decisions. As a social media manager or product manager you spend a lot of time and resources building up your site’s user base, so it is critical that you become aware of the dangers of hosting fake users and reviews on your site. Here are two specific reasons why.
1. Fake users and reviews affect your bottom line.
Consider these findings:
- A 2011 study from Harvard Business School estimated that a one-star rating increase on Yelp translated to an increase of 5% to 9% in revenues for a restaurant.
- In 2012, research from the Cornell University School of Hotel Administration indicated that if a hotel increases its review scores by 1 point on a 5-point scale (e.g., from 2.1 to 3.1) on review sites such as TripAdvisor, the hotel could increase its price by 11.2% and still maintain the same occupancy or market share.
- In 2013, a joint Northwestern University and MIT paper presented evidence of the rising trend for fake negative reviews in online retailer sites by customers, who did not even purchase the item they were reviewing. The research suggests that these reviews are far more negative than the average review and impact sales of the reviewed items.
- In 2013, BrightLocal released the third issue of its Local Consumer Review Survey, which explores consumer evaluation of online reviews and how the reviews influenced their opinions and purchases. For the 2011 to 2013 period, there has been an increase in the amount of respondents indicating that they trust online reviews as long as they believe that the reviews are authentic. BrightLocal points out that an increase in people in this category indicates that consumers are not blindly trusting reviews and do evaluate whether the reviews are genuine. They are catching up to fake reviewers.
The existence of rogue online reviewers is not just a rumor anymore. Fake users and reviewers are out there and they are profiting from your online community by swaying opinion and sentiment in unwanted directions. Recent surveys are pointing out that consumers are more aware of review spam and businesses need to pay closer attention to this trend.
2. Phony reviews can and have faced legal action and monetary fines.
On top of the monetary effects from fake reviews, they are illegal and the government is taking action. In 2009 the Federal Trade Commission (FTC) determined that paying for positive reviews without disclosing that the blogger or community user was being compensated could be a violation of the FTC Act. Already in 2010, a PR firm had to settle with the FTC for charges in advertising client’s gaming apps through misleading online endorsements.
This is a problem that affects both emerging startups and large corporations. On the one hand in startup settings, as app developers struggle to stand out from the crowd, they may fall for the temptation of cutting corners and pay for fake reviewers, instead of letting the organic review process take place. In an article from Wired.com about paid reviews for smartphone apps, Slide to Play, a site for reviewing iPhone games, told Wired, “Paid reviews damage our entire ecosystem because they harm consumers, period, full stop. People who think they are reading objective reviews are going to be disappointed after taking paid ‘advice’”. This statement Slide to Play is congruent with the survey findings from BrightLocal.
On the other hand, as marketing departments grow in large corporate settings, it becomes more difficult to keep track of vendors providing services to the company. How can you be sure that your social media vendors are following best practices and providing services within the legal margins of the law? Gartner analysts predict that increased media attention on fake social media ratings and reviews will result in at least two Fortune 500 brands facing litigation from the U.S. Federal Trade Commission (FTC) over the next two years.
According to research from Cornell, when it comes to spotting fake reviews you have about a 50% of chance of getting it right. Why would you risk so much given the mentioned monetary and legal consequences? Managing your social media is difficult as it is.
The solution lies in using technological advances to determine whether or not the author of the review is real. As of March 2013, 22.74% of the top 1 million sites on the Internet used Social Login as their preferred way to register users. Big names such as Bing, The Huffington Post, The New York Times and Pinterest rely on Social Login to create a smooth social signup process and keep those users engaged. Therefore, a social verification tool that would help you determine whether or not a social network account is real would be an efficient way to weed out fake phony reviews.
TruDetect helps you determine which registrations are legitimate so you can invest in the right customers and maximize user experience and revenues. If your site or online community allows registration using Social Login, TruDetect’s patented algorithms will analyze all of the registered social accounts on your site and provide a score. This score will help you determine the legitimacy of any account.
Don’t waste marketing dollars, time and resources reaching out to fake social network accounts and dealing with fake reviewers and fake users.