Startup joins ACCC battle against fake reviews, testimonials

With the Australian Competition and Consumer Commission vowing to focus on fake reviews, one entrepreneur caught in the crossfire has made eliminating them the focus of his startup.
Written by Michael Lee, Contributor on

It's no secret that even online shopping purchases are becoming more social, with many buyers seeking out online reviews before making purchases, but this has also resulted in a rise in shady tactics, such as fake reviews and testimonials from competitors. After being burned by a competitor employing these techniques, entrepreneur Sam Johnson decided enough was enough, and started his own business that uses social media to turn the tables on scammers.

Although the internet has changed the effectiveness of advertising, insights and research company Nielsen continues to find that consumers still trust "earned media", such as recommendations from friends and family. In particular, last year, it found that online consumer reviews were the second most trusted form of advertising.

But the rise of fake reviews and testimonials has the ability to mislead customers — whether they are generated by retailers or unscrupulous competitors — so much so that the Australian Competition and Consumer Commission (ACCC) has them focused in its sights this year.

The practice isn't limited to small companies, with Samsung currently being probed by Taiwanese authorities over claims that it paid students to write articles attacking HTC and recommending Samsung handsets. Whether the allegations turn out to the true, the damage has already been done, especially since the identity of the reviewers can't be verified.

"Fake testimonials are still around. You can get them for five bucks on Fiverr," Johnson said, highlighting just how easy it is to outsource marketing to people who a company has never even interacted with before. Yet, Johnson said the future isn't completely bleak, pointing out that many online buyers are becoming more sceptical of the source of a review.

"Consumers are also getting a lot more savvy, because it's becoming a more and more social internet, and consumers like to see who wrote [the review or testimonial]."

The idea behind Johnson's startup, Feedback Loop, is to bridge this gap for consumers by verifying reviewers' identities, while also protecting honest businesses. Although most consumers can relate to the suspicion that a certain review has been written by a company's own marketing team, Johnson has also found himself on the business end of the consequences of fake reviews, when a competitor ran fake reviews of his company's products. Johnson chose to take the high road by not naming the company, but said it had a significant impact on his business.

"That was frustrating to see that superficially, they appeared a more credible business, but when you read between the lines, they were less. Then I had difficulty getting any reviews from my customers at all using the existing system."

Johnson, who also formerly worked as an ACCC employee, found that linking reviews with social media identities could solve the issue of proving who a reviewer is, while also making the information more manageable for businesses.

Reviews and testimonials run through the Feedback Loop's systems, linking a review with a Facebook or LinkedIn profile while also providing the business with a central place to manage them. From here, they can be promoted by the business on other social media channels, be analysed for insights, or help the business deal with negative feedback within a controlled environment. Johnson said that work has already begun on integrating Feedback Loop into customer relationship management software suites, shopping carts, and various analytics and insights tools.

That isn't to say that reviewers don't have any control over their exposure on the web. Johnson stressed that users have the ability to decide how much of their profile they use to lend credibility to their testimony.

"The user has control over what is published. We have seen some people choose not to publish their photo. Everyone so far has been happy to put their full name to what they've written, and I think people are becoming more and more comfortable sharing their public profile."

The startup is taking a leaf out of the books of Etsy and oDesk by taking a global market approach, rather than restricting itself to a single country or region.

"We see the head office still being here, but we're very geared towards growing wherever [and] growing quickly. We've got a translator testing our product in China already. Because it's software as a service, you can just go out anywhere," Johnson said.

Putting its money where its mouth is, the startup already intends to move its business development manager Julius Narkus to Europe, where he will work.

"Our potential market is really wide, because it's pretty much every business that has an online presence and that cares about its customers," Narkus said.

Also eating its own dog food, Feedback Loop is using its own testimonial system, inviting anyone who has used its product to leave feedback on whether it works.

It is currently self-funded by its directors and prize funding from its recent InnovationACT win, and is applying for grants from initiatives like Commercialisation Australia. Next week, it will battle it out against 10 other startups at Echelon Ignite. Its competition at the Sydney round of Echelon includes startups Airtasker and Pocketbook.

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