Brand Enforcement / 01.25.2020

E-Commerce Manipulation: The Fake Review Problem

An Overview of How Fake Reviews Are Deceiving Consumers and Contributing to Manipulation of Amazon and Other E-Commerce Platforms

By Jon Pinney & Kyle Stroup

amazon fake reviews“A high percentage of the reviews on products you’re looking at are probably fake,” said KJK Managing Partner Jon Pinney when asked by Fox 8 News about a recent lawsuit filed in federal court related to fake reviews on the Amazon Marketplace. Fake reviews exist elsewhere, too—they are not just isolated to Amazon or even consumer goods. For instance, the restaurant you may be thinking about booking a reservation at may have fake reviews. Other businesses have been known to go to great lengths to keep unhappy customers from leaving negative feedback. But the manipulation of e-commerce marketplaces may bring legal consequences. While some United States Senators have taken an interest in the manipulation of e-commerce giant Amazon.com’s Amazon Marketplace and the coveted “Amazon’s Choice” badge, many consumers and merchants alike are completely unaware of the fraudulent activity occurring below the product picture and underneath the advertisements and daily deals.

As e-commerce continues to evolve, the competition among merchants for consumers and sales has increased significantly. Some merchants choose to gain a competitive advantage by using deceptive tactics to manipulate e-commerce platforms, such as the Amazon Marketplace. These deceptive tactics can include manipulating algorithms, fake product reviews and ratings, as well as click farms. Merchants use these and other tactics to increase their sales and gain market share.

Typically, a merchant will either incentivize its customers with free gifts, monetary compensation and/or warranties to write a product review or enlist the help of a third party to author a product review. These reviews help drive consumer behavior; whether they’re shopping via e-commerce platforms or the old-fashioned way in retail outlets across the country, people rely on the reviews and ratings on Amazon when making purchasing decisions.

The Washington Post detailed how merchants use Facebook to bolster their Amazon reviews and ratings. A December 2018 study found that 61% of reviews for electronics are fake, while 64% of reviews for supplements are also phony. Another study found that 82% of consumers believed they read a fake review in 2019.

These fake product reviews are created and listed on either the merchant’s product or on its competitors’ products. In the case of the competitor, they may have a claim related to disparagement since the reviews will negatively mischaracterize their product and its features. On the other hand, when the fake reviews are listed on the merchant’s product, the competitor may have a claim related to false advertising since the reviews will positively mischaracterize the merchant’s own product and its features, thereby usurping sales from the competitor.

In a letter responding to United States senators’ requests for information regarding the “Amazon’s Choice” badge, Amazon stated that a product’s reviews and ratings help determine which product receives the badge, which serves as Amazon’s endorsement and recommendation of “highly rated, well-priced products that are available to ship immediately.” It then stands to reason that if some merchants are manipulating the product reviews and ratings, those merchants are also manipulating the badge, which likely harms Amazon.

Third-party websites such as FakeSpot and ReviewMeta, which employ algorithms to analyze reviews, have recently come about. Their algorithms investigate the reviews on a given product for authenticity and return a “rating of deception” associated with the product’s reviews. These third-party sites can help guide consumers in their purchasing decisions, and can be useful for merchants looking to determine if their product reviews and ratings are being falsified by competitors.

Honest merchants may consider advertising more on the Amazon Marketplace or enlisting the help of a third-party to combat fake reviews and ratings. In recent years, an industry that provides services to merchants on the Amazon Marketplace and other e-commerce platforms has flourished. While some of these service providers consult with merchants about their products and assist with marketing, others operate in a more devious manner. These actors may operate what are commonly referred to as “click farms.”

A “click farm” (see example pictured below) was once a large group of people using computers to click a specific hyperlink, social media post or advertisement. Nowadays, a click farm is most likely one person operating numerous smart phones or tablets and clicking a specific hyperlink, social media post or advertisement. While the method has changed, the result remains the same—web traffic is grossly inflated.

amazon fake reviews

In the e-commerce context, click farms are used to click a merchant’s advertisement without any intention of actually purchasing the advertised product. Accordingly, the merchant must purchase more advertisements than required, and its conversion ratio of advertisements into sales decreases. The click farms drive up the costs associated with selling on the Amazon Marketplace because conversion ratio is factored into the price a merchant pays for advertisements on Amazon.

Amazon is aware that its marketplace has become littered with fake reviews over time. To its credit, the company has created policies and procedures to curb these and other problems. In 2016, Amazon began enforcing a new rule that disallowed merchants from incentivizing or paying for product reviews, but the problem has only intensified. Now, some of the world’s most well-known brands are leaving the Amazon Marketplace or refuse to enter. Might this be the next step in the evolution of e-commerce?

If you have any questions or would like to discuss further, please reach out to Jon Pinney at 216.736.7260 or jjp@kjk.com, Kyle Stroup at 216.736.7231 or kds@kjk.com, or contact any of our Brand Enforcement professionals.

 

KJK publications are intended for general information purposes only and should not be construed as legal advice on any specific facts or circumstances. All articles published by KJK state the personal views of the authors. This publication may not be quoted or referred without our prior written consent. To request reprint permission for any of our publications, please use the “Contact Us” form located on this website. The mailing of our publications is not intended to create, and receipt of them does not constitute, an attorney-client relationship. The views set forth therein are the personal views of the author and do not necessarily reflect those of KJK.