Reputation is everything. Businesses thrive on positive customer feedback, with 89% of consumers checking online reviews before purchase. But what are the legal implications when these glowing reviews are less than genuine? Are fake reviews illegal?
Research suggests that at least 10% of all product reviews are likely to be fake. An unsettling trend is emerging as unscrupulous businesses increasingly turn to dishonest strategies, which involve tactics such as crafting fake positive reviews, paying review sellers/brokers for glowing ratings, or requesting family and friends to falsely endorse their ventures. In some cases, this deceptive practice even extends to sabotaging competitors by posting fake negative reviews.
The global stage sees a lack of consensus on the legality of fake reviews, yet countries are awakening to the drastic implications, and are implementing laws to address this growing concern. This evolving landscape requires businesses to constantly stay informed to avoid unknowingly engaging in illegal activities amid the changing tides of global legislation. Let's explore where to find the most up-to-date legislation, and why platforms should be striving to eradicate fake reviews first and foremost to provide an authentic and trusted user experience.
Are Fake Reviews Illegal in the US?
The Federal Trade Commision (FTC) is an independent agency of the United States government that works to prevent fraudulent, deceptive, and unfair business practices, ensuring a fair and trustworthy marketplace. Actively engaged in cracking down on deceptive review practices, the FTC is currently seeking to prohibit the creation, purchase and dissemination of fake consumer reviews. For the latest and most comprehensive information on the FTC’s proposed rule regarding fake reviews, businesses can turn to the FTC website, a reliable resource to stay up to date with the evolving regulatory landscape.
Are Fake Reviews Illegal in the UK?
The Competition and Markets Authority (CMA) serves as the UK's competition regulator, playing a pivotal role in supporting business competition and curbing anti-competitive activities. The CMA supports legislative changes addressing fake and misleading reviews, with the upcoming Digital Markets, Competition, and Consumers (DMCC) Bill proposed for enactment before the end of 2024. The Bill advocates banning practices related to submitting, commissioning or incentivizing someone to write fake reviews. The latest updates on the DMCC bill can be found on the UK government website.
Are Fake Reviews Illegal in the EU?
The European Commission's proactive move to improve consumer protection has involved the introduction of the EU Omnibus Directive, also known as the Enforcement and Modernization Directive, which became effective in May 2022. Traders on online marketplaces are required to implement robust processes for verifying the authenticity of consumer reviews. Prohibiting the submission of fake reviews and the manipulation of endorsements, the EU aims to ensure that product reviews genuinely reflect the sentiments of real customers. Online marketplaces operating within the EU must adapt their practices to comply with these strict rules. For a thorough understanding of the implications for marketplaces affected by the EU Omnibus Directive, download our briefing document.
Amazon’s Legal Action Against Fake Reviews
The severity of the fake reviews issue is underscored by recent legal action taken by Amazon against two review brokers, who have now been sentenced to 2.5 years in prison for orchestrating deceptive practices within Amazon's store. These individuals, operating from China, engaged in a scheme to sell fake reviews, both artificially boosting product rankings with positive reviews and sabotaging competitors with negative ones. Amazon's Counterfeit Crimes Unit played a crucial role in supporting law enforcement efforts, resulting in the sentencing of these brokers. This outcome serves as a stark reminder of the gravity of fake reviews, prompting the need for stringent measures and collaborative efforts to maintain the authenticity and trustworthiness of customer feedback.
Implications of Fake Reviews Beyond The Law
While understanding the legal landscape is crucial, the implications of fake reviews extend far beyond regulatory compliance, with safety emerging as a pivotal concern. Online platforms must recognize that fake reviews pose severe risks, making it imperative to address the challenge head-on. Here are the top consequences, emphasizing the critical need for action:
- Consumer Safety and Wellbeing
In sectors such as healthcare, childcare, cosmetics and hospitality, where trust directly impacts user safety, fake reviews can result in actual harm. Consumers need to know they are choosing healthcare providers based on genuine reviews. Or that their selected childcare facility is as good as the reviews claim it to be. Fake reviews can lead to misinformed decisions, compromising safety and wellbeing as a result.
- Erosion of a Trusted Reputation
Beyond legal implications, fake reviews tarnish a platform's reputation, eroding the bedrock of trust that businesses aim to establish. The fallout can not only result in disillusioned customers, but also influence overall perception of the brand, impacting brand loyalty, and deter future engagement.
- Consumer spending
Consumers who trust fake reviews and subsequently make a purchase based on these reviews, are being misled into spending their money in a particular way. When the product or service doesn’t live up to the glowing reviews, customers can feel frustrated and cheated out of their money.
- Threat Risks
The rise of fake reviews opens doors to more threat risks. As businesses grapple with the influx of deceptive content, the potential for other threats, such as scams, increases. Online platforms must recognize that fake reviews are a trust and safety concern and take effective measures to detect them.
- Undermining Legitimate Businesses
Another significant impact is the inherent injustice imposed on law-abiding businesses. Genuine enterprises working diligently to provide excellent products or services, and legitimately garnering authentic positive reviews from satisfied customers are overshadowed by competitors using deceptive practices to artificially boost their reputation. The unfair competition not only undermines the hard work of honest entrepreneurs, but also jeopardizes the essence of a level playing field in the marketplace.
In an era where user safety and trust are paramount, online platforms must prioritize review authenticity and actively combat deceptive practices to create a safer and more trusted digital ecosystem.
The Coalition for Trusted Reviews
Recognizing the escalating importance of authentic consumer reviews, major industry players including Amazon, Booking.com, Expedia Group, Glassdoor, Tripadvisor, and Trustpilot have joined forces to establish the first global Coalition for Trusted Reviews. This cross-industry collaboration signifies a shared commitment to safeguarding access to reliable consumer reviews on a global scale. The coalition's collective objective is to define best practices for hosting online reviews and share effective methods for detecting fake reviews, addressing the issue at source. This initiative underscores the united dedication of these influential companies to maintain the highest standards of integrity, transparency, and accountability in the realm of online reviews.
What can you do?
So, what can you do to combat fake reviews on your platform? Understanding the implications of fake reviews and the tightening legal landscape is crucial, but taking proactive measures is even more vital. With the surge in generative AI, distinguishing genuine reviews from fraudulent ones based solely on content has become increasingly challenging. Fraudsters are now able to create fake content in non-native languages and replicate their efforts at scale.
This is where Pasabi's proven fake review detection software comes into play. Going beyond text-based content review, our software continually analyzes customer reviews to identify key risk signals. We can detect businesses seeking to enhance their profiles through paid for reviews from review sellers, businesses undermining competitors with fake negative reviews, and uncover patterns in the data to reveal fraud rings of connected users.
Connect with a member of our team today to discover how Pasabi can empower you to combat fake reviews, prepare for legislation, safeguard your reputation, and protect your users online. Businesses that strive for authenticity in the digital world, where it’s increasingly hard to believe what you read, will thrive.