The High Cost of Fake Reviews

Positive reviews boost sales in the online market place. Obvious as that statement is, the corollary is equally obvious – bad agents will try to game the system.

When it comes to fraud, most e-commerce companies think first of credit card fraud or account takeover, actions that immediately and indisputably affect the bottom line. But fraud, at its essence, is any deception, deliberately practiced, that secures an unfair or unlawful gain.

The reward for having a review system on your website or positive reviews of your product is immediate. Studies have shown that a that a single star increase in a product’s rating can boost revenues up by 10% and having reviews built into a website increases revenues from 10-35% on products with positive reviews.

It may seem like a no-brainer – good reviews mean good business! However, the potential threat of fake reviews only surfaces down the road and if left unchecked can tank a company’s credibility better than any data hack.

Because of that potential, some companies take a more active role in securing those good reviews. A few get their own employees to post glowing reviews in the App store or directly offer customers rebates for five stars on Amazon.

The strong incentive to cheat has created a bumper crop of new companies eager to game the system by hiring out writers to upload tailored book reviews that send books to the top of Amazon charts or flood app store with fake user ratings to boost a program to the top of the charts, which gains legitimate sales thanks to the new exposure.

Regulators are stepping in to clamp down on fears that negative reviews will tank unfairly targeted companies or inflate undeserving ones. New York was among the first to start clamping down on companies, meting out fines of $350,000 against some 19 fake review companies that billed themselves as “reputation enhancement” services.

After fifty years of the ad game, customers aren’t so trusting anymore. They know enough not to believe all advertising, but they still seek guidance before a purchase. They turn to friends and, presumably, neutral third parties. But because fake reviews are more rampant, customers have had change how they view and weight reviews. In a word, they look for humanness. Studies have shown that users respond to human-sounding reviews, positive or negative. The quality of the reviews, not their quantity or topped-out rating, is what consumers look for and trust.

And trust is what keeps customers coming back to your website, as valuable as any other product. Fake reviews deflate sales, damage trust, and now comes with legal consequences. Companies are eager to use biometrics to detect humanness in financial transactions, but why aren’t more using that same behavioural technology to safeguard against review fraud?