The fake review problem persistent in the e-commerce industry
The decision to buy a product online is heavily influenced by customer reviews. Ecommerce is a multi-billion dollar industry and solutions need to be invented to eliminate the fake review scam.
OOnline shopping has become one of the major parts of many people’s life. In the US market alone, e-commerce sales grew by more than 50% to $870 Billion during the pandemic in 2021. The industry itself is progressing and growing at a faster pace.
The e-commerce industry has directly impacted micro, small and medium enterprises across the world, especially in India. India which is one of the world’s fastest-growing economies saw an annual growth rate of around 25% — 30% in the e-commerce space.
According to a report published by Bain & Co., the e-commerce market is expected to exceed $120 billion by FY26. Tech-enabled solutions like Digital payments, Analytics-driven consumer engagements, evolved advertisements and improved logistics are some of the major factors behind the growth story.
One of the biggest challenges faced by the e-commerce industry has been fake reviews. It has been found that the majority of the people shopping online are influenced by the customer reviews added on the listed product. Their decision to buy the product may be heavily impacted by the feedback given. Fake reviews are one of the critical elements to winning customers and maintaining a positive reputation for many businesses.
There have been cases where fake comments are added to the listed product in order to manipulate and promote positive feedback about the product. According to a 2013 European Consumer Centers Network web survey, about 81% of the respondents read the product reviews before shopping.
Have you ever come across “The Shed of Dulwich”?
Well, if no. Let’s figure it out. The case study is about how an English author decided to open a fake restaurant and it was featured among the top places on the website of Trip Advisor.
The Shed of Dulwich Hoax
In 2017 Oobah Butler, an English Author decided to try something nobody would have thought of before. He used to run a side job previously, writing fake reviews on popular travel companies like TripAdvisor at a rate of £10 per review. What if he could take the “fake reviews idea” and elevate it a step forward? What if he could create a fake restaurant?
So he bought a burner phone (the disposable kind) and listed the address as an “appointment-only restaurant” on Trip Advisor. People had to book the appointment from before and you couldn’t just walk in. He set up a website, made a quirky menu (food items based on moods), took fake photos of dishes, and got people to write reviews that seemed genuine.
The Shed was ranked 18,149 — the worst in London at the beginning of the first day. Within a few weeks, The restaurant went viral. Bookings started to exponentially flow in for this fake place. And in just six months, The Shed cracked the #1 spot, becoming the “best restaurant in the world” according to the TripAdvisor Travellers’ Choice Restaurants Awards.
A fake restaurant with fake reviews at #1 on one of the internet’s most popular and trusted travel websites. It was quite insane!
This menace is everywhere — Amazon, Flipkart, and even Zomato!!!
Now if you are wondering how does the whole business work. Let me elaborate!
- An enterprising individual had an amazing idea to make a quick buck.
- So he decided and created a new group of a similar set of people, who would specifically write fake reviews for products and service providers.
- Now imagine if you’re looking to make a quick buck yourself. You try to join the group. The admin probably looks through your profile once, just to ensure that you’re not someone working in law enforcement and voila, you’re in! What you see then astounds you.
- Sellers are busy plying their wares and soliciting fake reviews. In return for your flowery plaudits, they promise to refund the amount you spent on buying their product and pay you a fee that could even top $100!
That’s a lot of money for just one measly review. But for the seller, these positive reviews might mean the world. If they get a critical mass, the higher visibility alone could help them break even on their investment.
Fake reviews can boost sales by the millions. In one instance, Legacy Learning Systems Inc, a music learning company generated over $5 million in sales by splashing $250,000 on fake reviews across the web.
So what is the problem here?
According to the World Economic Forum, 4% of all online reviews could be fake and this alone gets people to waste $152 billion on products they may not even buy or want every year.
Now for platforms like Amazon and Flipkart, fake reviews are a problem of gigantic proportions. You see, its business relies on network effects — if it has a significant user base that leaves genuine reviews, it helps others make the right choice. It creates trust and fosters a meaningful relationship between the third-party aggregator, the seller, and the buyer. In fact, studies have pointed out that 76% of folks treat these online reviews as if they had just been made by a friend. Now imagine that they start thinking otherwise. It affects legitimate businesses too.
And considering reviews influence a whopping $4 trillion worth of e-commerce spending, there’s a lot at stake here.
What are Governments regulatory authorities and e-commerce companies like Amazon doing in order to end this menace?
Amazon has been heavily investing to find the solution to the problem for a while now. Just in 2019, the tech giant spent more than $500 million and hired 8,000 people to eliminate the fraud on its platform. But after all the efforts, it has not been after to do so. According to research conducted by Harvard Business Review, It takes an average of 100 days before they manage to take down a fake review.
Even Facebook has been trying its bit. It has systems in place to detect these fraudulent groups. But a simple workaround like masking the message with special characters — “R*fnd Aftr R*vew” (refund after review) can throw this detection system off its game.
Especially considering governments are now taking notice. In April this year, the UK government proposed plans to make fake reviews illegal. And if this goes through, businesses could even be slapped with fines as heavy as 10% of their global turnover for misleading customers.
In India, the Department of Consumer Affairs (DoCA) met with various e-commerce entities along with consumer rights activists to figure out ways of dealing with fake reviews. If all goes to plan, we might soon have a framework that may alleviate the problem to a fair extent.
They need to do more. Many problems still persist. We will just have to wait and see how things progress.
About the Author
The article was written after thorough research across multiple sources. Saransh is a consultant working at Big-4 consulting firm based out of India for more than 2 years.
