Businesses and The Fake Review Phenomenon

At one point or another, we have all sought input from others to help us make a decision. It’s a common problem to struggle with finding a delicious restaurant to eat at, deciding which brand of an item to buy, or choosing a place to purchase your Christmas tree. The Internet has helped consumers make more informed choices, and a growing number of people are turning to online review sites to help them navigate a wide range of options. Per Kelli Grant of Marketwatch:

In December, visits to the popular local-business review site Yelp.com were up 15%, year-over-year, according to Web traffic analysis site Compete.com. Similarly, travel review site TripAdvisor.com saw an 8% increase in visitors, and traffic to local-services review site Angie’s List jumped a whopping 80%. What’s behind the rising demand? In a 2012 report from market research firm Nielsen, 70% of consumers said they trust online reviews, a 15% increase from 2009. That means online reviews are second only to personal recommendations from family and friends as the most trusted source of buying advice, researchers say.

As the online review industry explodes, it’s fair to question how reliable these sites are. Is consumer trust misguided? Bing Liu, a professor at the University of Illinois at Chicago, believes as many as 30% of online reviews are fake, and Gartner research expects that number to rise in the coming years. Scour the Internet, and you can find companies willing to pay consumers small sums of money to write fraudulent reviews of products or services they have never tried out.

The motive for such unethical behavior is financial gain and market share increases. On the one hand, some companies commission writers to post reviews lauding the specific entity. By the same token, loyal employees–hoping to help their organization out–take to the Internet posing as customers gushing about their experience. The logic is simple; positive reviews provide a tangible impact on a business’s financial performance.   A 2011 Harvard University study determined that a one-star-better difference increased sales anywhere between 5% and 9% for an independent restaurant. On the other hand, organizations commission negative feedback that can cripple a business. Nobody wants to eat at a restaurant that receives one star on Yelp. Knowing this, competitors find people to write scathing reviews and drive traffic away from the competition.

Despite the disturbing trend, consumers should continue to use these online review communities and follow a few common sense guidelines. First, put more stock in profiles with multiple reviews. It is easy for one or two fake posts to skew the entire perception of a restaurant. However, if you see a pattern of reviews underscoring the delicious carne asada at Danny’s Tacos in Los Angeles, chances are the food truck makes a tasty torta. Next, view overly positive or incredibly negative posts with a skeptic eye as they are prime candidates to be fake reviews. Finally, do not be afraid to ask a friend if they have had any experience with the subject in question. Online review sites can be a fantastic starting point for narrowing down possible options, but they do not need to be your only source for information.

Every once in a while, a product or service will fail to live up to the expectations generated by the online reviews. That’s just the cost of making decisions based on information provided by often anonymous sources. However, consumers face similar risks when they ask friends for help in making a purchasing decision. Who hasn’t seen an awful movie a friend raved about? A few bad experiences should not be a deterrent. On average, these sites provide a relatively comprehensive database that effectively and concisely aggregates insightful information about the restaurants, products, and other businesses vying for our disposable income.

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