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September 24, 2013

Attorney General: You can't believe everything you read online

Fines coming to those with phony online reviews

ALBANY, N.Y. (AP) — A perfect hotel? An amazing restaurant? Teeth whitener that leads to romance?

Such things may only truly exist in online reviews, and New York’s attorney general says many of them are fakes, just as more consumers searching for guidance are starting to bite.

Attorney General Eric Schneiderman is trying to dismantle what he calls a system of creating false online reviews for products and services. On Monday he announced that he has settled cases with 19 companies that included $350,000 in penalties. The fake plaudits are sometimes called “astroturfing,” a reference to the synthetic grass used on sports fields.

“Consumers rely on reviews from their peers to make daily purchasing decisions on anything from food and clothing to recreation and sightseeing,” Schneiderman said. “This investigation into large-scale, intentional deceit across the Internet tells us that we should approach online reviews with caution.”

He said that by 2014, one researcher estimates 10 percent to 15 percent of social media reviews will be fake.

The rise in the phony review business comes as more people trust such commentaries, even though they are often posted anonymously. Schneiderman said Harvard Business School found that increasing a restaurant’s review score by one star on Yelp.com could boost business up to 8 percent. Cornell researchers found an extra star on Travelocity or TripAdvisor could translate into an 11 percent increase in a room rate.

In April, the Nielsen consumer survey company found online reviews were the second most trusted form of advertising after word-of-mouth by family and friends. The survey found 70 percent of customers worldwide trust online reviews, rising 15 percent in four years.

But Schneiderman found many of the reviews were written by people who not only never experienced the product or service, but never lived in the United States. Workers in the Philippines, Bangladesh and Eastern Europe passed judgments on goods and services for $1 to $10 per review, Schneiderman said.

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