Feds want more teeth to fight fake online reviews

Over the past several years, fake online reviews have become more and more of a headache for Fishers-based SupplyKick.

The company helps its customers sell their products via Amazon.com, Walmart.com and other online platforms. That task becomes more difficult when fabricated five-star reviews for mediocre products lure consumers away from what SupplyKick’s clients are selling—or when clients are targeted by phony one-star reviews created by an unscrupulous competitor.

“This is an every-day, every-week type problem for us,” said SupplyKick’s founder and CEO, Chris Palmer. “There is a very, very pervasive problem.”

But Palmer has hope that a Federal Trade Commission proposal will help clean things up.

The FTC has proposed a rule that the agency says would give it more power to go after fake online reviews. Under the proposal, businesses would be explicitly prohibited from practices such as writing, buying or selling fake reviews; providing compensation for positive or negative reviews; or selling fake social media followers, among other things.

“I’m encouraged by the FTC doing this. I do think it will help,” Palmer said.

The rule would also give the FTC the authority to impose financial penalties on violators. Currently, the agency can sue violators, asking the court to impose fines. But it has no authority to levy fines itself.

“Although the FTC has taken strong enforcement action in this area recently, case-by-case enforcement without civil penalty authority might not be enough to deter clearly deceptive review and testimonial practices,” the FTC said in a June 30 statement announcing the proposed rule.

The FTC is accepting public comment on the proposed rule until Sept. 29.

The problem

Palmer said SupplyKick opposes fake reviews for multiple reasons—they hurt online sellers who play by the rules, but they can also pose a more existential threat. If shoppers can no longer trust the reviews they see on a website, they might decide to quit using that site.

“If you play this out,” he said, “that’s what we’re concerned about—people abandoning the major platforms through which we generate sales today and going to some more reliable alternative.”

Other local marketers say they also strongly oppose using fake reviews to puff up one’s business or attack competitors—but they know it happens, and it’s not always easy to control.

Melanie Allen, co-founder and CEO of Indianapolis-based Green Loop Marketing, said she hasn’t seen a lot of fake reviews. The firm’s clients include not-for-profits, tech firms and professional services organizations.

But Allen said her firm once dropped a client who wanted to have someone create negative reviews, smearing a competitor.

“That was deeply concerning, and we pushed back on that quite a bit,” Allen said. “Shortly after that, we let that client go. We let them know, ‘Hey, that is ethically not OK.’”

Jenn Lisak Golding, founder and CEO of Indianapolis marketing firm Sapphire Strategy, said she once had a client who faced the opposite problem—a competitor’s positive reviews exploded in number over a short period of time. Based on the vagueness of the comments and the customers’ fake-sounding names, Lisak Golding highly suspected the comments were inauthentic.

The situation caused her client’s company to drop lower in Google search results, Lisak Golding said, because businesses registered with Google appear higher in search results if they have more reviews. A few potential customers also questioned why the client’s competitor had so many more good reviews, Lisak Golding said.

Reporting suspect reviews to the site that hosts them does not always get results, she said. “It is a 50/50 scenario as to whether anything’s going to happen.”

In this case, Lisak Golding said, she advised her client to respond by inviting its own customers to submit online reviews, which helped humanize the business and strengthen its online presence. “We definitely saw success from that campaign.”

Platforms respond

The review platforms Amazon.com Inc., Google LLC, Tripadvisor LLC, Trustpilot A/S and Yelp Inc.—along with dozens of other groups, businesses and individuals—have already weighed in on the FTC’s proposal.

In its response, Google expressed support for the proposed rule, while also highlighting its own efforts to identify and remove fake reviews from its platform. As an example, Google said that, in 2022, it removed millions of “fake, inorganic or otherwise malicious” reviews from its Google Play online marketplace.

In its comments, Amazon.com said it uses “a combination of sophisticated technology and skilled investigators” to combat fake reviews, noting that the company “proactively stopped more than 200 million suspected fake reviews in 2020 alone.”

Amazon did not explicitly support or oppose the FTC’s proposed rule, saying it supports a collaborative approach among government, industry and consumer groups to address the issue.

In an email attributed to its general counsel, Aaron Schur, Yelp told IBJ, “We applaud the FTC’s proposed rule to take action against fake reviews and testimonials, and plan to share further comments with the FTC.”

In that email, Schur also noted that Yelp uses technology and human moderators to fight misinformation on its platform and has a practice of notifying the FTC and other regulators when it finds deceptive reviews.

Rule’s limitations

But in and of itself, the FTC rule is not likely to eliminate the problem of fake reviews.

Palmer traces much of the problem to China, a market in which he said Amazon began actively courting sellers within the last decade or so. Palmer said he believes much of the fake-review activity originates in that country.

“We didn’t find that it was much of a concern until 2017. That’s when things got a little crazy, and we’ve been kind of chasing tail, or playing Whac-A-Mole, ever since,” Palmer said.

His company now pays third-party vendors thousands of dollars each month to combat inauthentic reviews and counterfeit products on behalf of SupplyKick’s customers, he said.

The FTC’s proposed rule would have limited effect on non-U.S. violators, which “will still largely continue violating rules with impunity,” Palmer said.

Amazon itself has more power to combat unethical sellers overseas, he added, because the company has the power to remove such sellers from its platform.

Patrick Tamm, CEO of the Indiana Restaurant & Lodging Association, said the FTC’s proposal might have an impact—but he questioned how easy it would be to enforce. “The details will be very, very important.”

People who work in customer service say fighting fake reviews is important because online comments carry so much weight with consumers.

Whether choosing a restaurant, vacation lodging or even where to apply for a job, “so many guests today—or people today—are making their decisions based on what they see on a review site,” said Carissa Newton, director of marketing at Indianapolis-based Cunningham Restaurant Group.

Cunningham—which operates 42 restaurant locations under 18 concepts that include Bru Burger, Mesh and Livery—received about 1,600 reviews in the past month. Newton said the company reads and responds to them all. She estimated that only 5% to 10% of the company’s reviews are inaccurate or fake—sometimes posted by disgruntled former employees.

“We’ve made menu changes based on insight that we’ve gotten from reviews. We’ve also identified things that needed to be addressed either in training or with team members, where we’ve seen it in a review.”

Sue Clevinger, vice president of customer experience at Carmel-based travel insurance company Seven Corners Inc., said her department typically spends two to four hours each day monitoring, investigating and responding to online customer comments.

Among other things, Clevinger said, the reviews help Seven Corners identify trends and areas for improvement. “It’s very, very important to us.”

Reviews are also crucial from the consumer’s perspective, said Jennifer Adamany, communications director at the Better Business Bureau Serving Central Indiana.

“It’s a modern-day word-of-mouth,” Adamany said. “Being able to identify when it’s real and when it’s not—it’s crucial.”•