Wednesday, November 11, 2015

Online Reviews: Ten Things You Should Know

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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