With studies showing that at least three-quarters of online shoppers check product and service reviews before they buy, the evaluations have become more important than ever in global commerce. But fake reviews upend the system.
In the United States, state attorneys general and a key federal agency are leading efforts to crack down on false or manipulated reviews that can lead to purchases of shoddy products or services and sometimes leave little recourse for consumers. Still, efforts to address the problem pale in comparison to the number of fake reviews and the economic damage they cause, according to recent studies from the Center for Data Innovation and the World Economic Forum.
About 4% of worldwide online reviews are fake, according to the World Economic Forum. That may not sound like much, but the organization estimates that those fake reviews cost $152 billion in online spending annually. And even if the fake reviews don’t cost consumers directly, they can influence purchasers who may choose another product based on a negative review, to the tune of $791 billion in e-commerce spending in the United States alone, the group said.
“It’s a real problem for both consumers and business,” said Daniel Castro, director of the Center for Data Innovation, which published a report in September on the issue. “It can cause financial losses, bad purchases and physical injury.” For example, if a device that is supposed to protect against slippery surfaces fails, it can cause injury, he said.
Castro’s study found that 49% of American consumers trust online reviews as much as recommendations from friends and family, and another 28% put just as much value on them as articles written by experts.
“The problem with fake reviews is there’s a lot of incentive to cheat,” he said, adding that people can use fake reviews to build up their own businesses or to put down a competitor.
Sites that are in the business of “selling trust,” such as Yelp or Google, “want to be a trusted source,” Castro said. “But there’s only so much a platform can do when they are up against people trying to cheat the system. That’s where state laws can make a difference.”