Companies fined $350,000 over fraudulent online reviews

Giving its own products high reviews online can now land a business in hot water, with heavy fines.
Written by Charlie Osborne, Contributing Writer

Companies that create positive, fake reviews for their products will be fined in the future to try and control the growing deception of consumers online.

On Monday, New York regulators are expected to announce new legislation which is part of a crackdown against misleading practices which try and entice consumers into buying their products online.

In a world where word-of-mouth and peer reviews are often taken into account when purchasing products or services across the web, many companies post positive reviews of their own products, pay others to do so, or write negative reviews about competing firms.

While a fake review about a new shampoo may cause marginal disappointment for a consumer, the problem lies deeper. Lawyers, ultrasound clinics and dentists are also bumped up by fake or paid reviews -- which could spell disaster for an unwitting customer.

A year-long investigation conducted by New York investigators into the practice has resulted in 19 companies -- including a teeth whitening service, adult entertainment club and laser hair removal clinic chain agreeing to pay a total of $350,000 in fines.

Eric T. Schneiderman, the New York attorney general, said:

"What we've found is even worse than old-fashioned false advertising. When you look at a billboard, you can tell it's a paid advertisement -- but on Yelp or Citysearch, you assume you're reading authentic consumer opinions, making this practice even more deceiving."

At the current rate of growth, a 2012 Gartner study estimated that one in seven ratings and recommendations found on social media sites would soon be fake.

"Sadly, it will take continued policing, both by law enforcement and the review sites themselves, to make sure some businesses stop lying to customers they claim to serve," Schneiderman noted.

Via: The New York Times


Image credit: Flickr

This post was originally published on Smartplanet.com

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