By Whitney C. Gibson and
Jordan S. Cohen on November 11, 2015
Whether you like them or not,
it is hard to ignore online reviews. For many businesses, online review pages
and ratings are displayed prominently in Google and Bing searches. And many
brick and mortar retail stores have "People Love Us on Yelp" stickers
displayed on their doors or windows.
Speaking of Yelp, according to
the latest data, the site / app has 90 million cumulative reviews (since its
2005 launch) and it is averaging 89 million mobile unique visitors and 79
million unique desktop visitors per month. Of course, Yelp is just one site /
app that features online reviews, albeit the leading forum and one that
generally appears high in search results.
Online reviews are not only
increasing in number and being widely read, but they are also being relied upon
by many people. According to a recently published Moz study, which surveyed
1,000 consumers through Google, 67.7 percent of the respondents indicated that
online reviews had impacted their purchasing decisions.
And online reviews are
frequently making headlines, from the controversial Yelp filter to the recent
crackdown on fake reviews and legislation about "gag clauses."
In short, there is a lot more
to online reviews than a simple one through five star rating. Here is a brief
overview, in no particular order, of ten things consumers and businesses should
know about online reviews.
No Surprise, But Many Online
Reviews are Fake
Fake online reviews can be
both negative (intended to harm a company or product) or positive (intended to
help a company or product at the expense of competitors or competing products).
In 2011, a University of Illinois at Chicago professor said up to 30 percent of
online reviews for certain products may be fake. Meanwhile, 20 percent of Yelp
reviews are fake, according to a 2013 Business Insider article.
There is Value in 3-Star
Reviews
Related, as much as people
tend to trust online reviews, there is also lots of skepticism, and many savvy
consumers will look past the one-stars and five-stars. "Nobody leaves a
fake three-star review," said Nicholas White of The Daily Dot. This is not
to say there are not legitimate reviews on either end of the spectrum, but
oftentimes the most genuine reviews lie in the middle.
Competitor-Published Reviews
Can Give Rise to Numerous Legal Claims
When a business competitor
poses as a customer and unlawfully submits a review of a business, this can
give rise to not only a defamation claim, but also potentially claims for
unfair competition under state law or false advertising under the federal Lanham
Act.
How to Spot Fake Online
Reviews
There have been numerous
articles published online about spotting potentially fake reviews. Among the
common characteristics: the authors have not published any other online
reviews; the reviews are overly enthusiastic; certain keywords, such as company
names, are overused; and the reviews are unusually specific, such as fact-heavy
narratives.
Review Pages Often Suffer From
a Sampling Bias
Online review pages for
businesses are often not representative of actual customer bases, oftentimes
due to review pages having a small number of reviews (meaning a single bad
review can carry significant weight). According to a 2013 study published in
the Cornell Hospitality Quarterly, specifically about online hotel reviews, review
pages and their ratings tend to be disproportionately negative but level out as
more online reviews are posted.
Difference in Star Ratings on
Yelp = Potential Revenue Change
According to a 2011 Harvard
Business School study of restaurants, a one-star rating change on Yelp can
result in a difference in revenue of five-to-nine percent.
The New York Attorney
General's Office Targeted Fake Reviews
In 2013, The New York Times
reported that New York regulators settled with 19 companies for $ 350,000 in total
fines in a crackdown on fake reviews. The New York attorney general's office
had spent a year investigating both companies that were creating fraudulent
reviews and those who were buying them.
Non-Disparagement Clauses
Subject of FTC Lawsuit
In September 2015, the Federal
Trade Commission (FTC) filed a lawsuit in a federal court against two companies
and their principals over "gag clauses" aimed at preventing negative
reviews. This was the first time the FTC filed suit regarding non-disparagement
clauses.
Amazon Sues 1,114 "John
Doe" Defendants over Fake Reviews
In October 2015, Amazon.com,
Inc. filed a lawsuit against more than 1,000 unidentified Fiverr.com users who
allegedly offered to publish fake positive reviews for others. In its
complaint, Amazon alleged the Fiverr users had helped companies "gain
unfair competitive advantages," which has harmed both Amazon customers and
the Amazon brand.
California Has Banned
Anti-Negative Review Clauses, Congress Could be Next
In September 2014,
California's governor signed into law a bill that subjects businesses to fines
for contracts / agreements intended to prevent customers from posting negative
online reviews. Congress is currently considering similar legislation regarding
anti-negative review clauses, the Consumer Review Freedom Act.
For more information, contact
Whitney Gibson at 855.542.9192 or wcgibson@vorys.com. Read more about the
practice at http://www.defamationremovalattorneys.com/.
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