Yelp! False Advertising in the Internet Age

September 24, 2013 | Charles Bowen

imagesCAWOZX0QA recent announcement by New York’s Attorney General’s office should serve as a warning, both to digital shills as well as to the companies who retain their services. The AG’s office announced that it would begin seriously cracking down on companies that purvey fake online reviews.

The decision to launch an assault on the online fraudsters began after the AG’s office initiated an undercover sting operation where employees pretended to be, of all things, the owners of a Brooklyn yogurt shop. These fictitious yogurt sellers posed as desperate small business owners eager to increase their online ranking. Some simple phone calls to supposed marketing companies resulted in a succession of offers to write fake reviews for sites like Yelp, CitySearch, Google, TripAdvisor and others. The sting operation led to charges against 19 companies across New York that agreed to pay more than $350,000 in fines and promise to cease manipulating review sites.

Attorney General Eric T. Schneiderman says that the practice of online reviewers pumping up sites with fake comments is a serious problem that harms consumers with misleading information. The practice, known as “astroturfing,” is seen as the 21st century’s equivalent to false advertising tactics that plagued the country during the early days of advertising. The AG says that the practice is not only deceptive; it’s illegal and violates multiple state laws against false advertising. According to the AG’s office, the companies perpetrated their frauds in one of two ways: either by tricking the automatic spam filters on review sites by trying to disguise their IP addresses to allow for multiple fake reviews from one source, or else they paid legitimate users with valid accounts to post fake reviews.

For their part, review companies are spending lots of time and energy chasing down these fictitious reviewers, employing sophisticated filtering software and conducting undercover stings of their own. The fraudsters have a great incentive to keep trying given that small businesses, especially restaurants, say their business increasingly depends on positive online reviews. In fact, a study by Harvard Business School found that even the boost of a single star on Yelp’s rating scale would increase restaurant revenues by 5 to 9 percent. A similar study by Cornell’s School of Hotel Administration found that a one-star jump in the rating of a hotel on a site like Travelocity could lead to an 11 percent rate hike for the hotel’s rooms.

Review companies, along with law enforcement officials, say the problem is a serious one given that estimates show that currently somewhere between 10 and 15 percent of all social media reviews are fake. Though the 19 companies swept up in the recent bust is seen as an important step, the AG has a long way to go to end the practice. In the mean time, fake reviewers as well as the small businesses that employ them should take notice that law enforcement officials will be closely watching suspicious yogurt shop reviews.