Economics and Regulations of the Rating System
From Google Maps to Amazon to TripAdvisor, keeping a consistent five-star record and an impeccable review matters. A lot. Uber reportedly considers deactivating a driver’s account if they score anything lower than 4.6 on their 5-star rating system. Who doesn’t take a look at reviews on Google Maps or Yelp before choosing the right restaurant to dine in? There is a reason why the Black Mirror episode Nosedive makes a chill run down our spine; the depiction of the rating system may be futuristic but it’s oh so relevant.
In an era where ratings and opinions become the bread and butter of our way of living and decision-making, it is not surprising that some people seek to “cheat” the system by getting paid reviewers to uplift the ratings or by recounting staggering experiences that never seem to have taken place – while others are threatened with a lawsuit for having written a one-star review. Let us take a look into the economics and the regulations of the rating system.
The Economy of the Online Reviewing Industry
Buying fake reviews seems to be very easily done. Already in 2014, Canadian broadcaster CBC has investigated how it works. The CBC team created a web presence of a non-existent food truck to see how popular it would get on the Internet without ever serving the product. Gig workers would offer to write reviews that are so articulate that people were unable to tell they were fake. A company would offer to create a buzz on the net and inconspicuously post fake reviews on Yelp, all to manipulate the consumers’ decision-making and generate revenue. Albeit not of the same proportion, it surely brings up to one’s mind a certain Cambridge Analytica, doesn’t it?
Although the market size of the fake reviewing industry remains unclear, research by the UK-based consumer group Which? reveals that over 53,000 products on Amazon may have been benefiting from incentivised reviews. The same group has earlier reported of certain Facebook groups that would facilitate such incentivised reviews. Members of the group would purchase a product, write a 5-star review regardless of their true opinions, with a promise that they will receive a refund of the product from the vendor.
What of the Regulations?
In the UK, the Competition and Markets Authority (CMA) launched an investigation in May 2020, looking into online reviews. In June 2021, the CMA has opened formal cases against Google and Amazon, stating that they may have breached consumer protection laws. In the same article, the CMA proposes to establish “a new pro-competition regulatory regime for digital markets, to curb the power of big tech,” which warrants further observation on the CMA’s efforts in the UK.
Similar movements are taking place elsewhere. In 2019, the US Federal Trade Commission (FTA) announced its first case that challenges fake, paid reviews, following a complaint, on the basis of (amongst others) 15 USC §45, which prohibits “unfair or deceptive acts or practices in or affecting commerce.” The court case ended with a settlement, and Amazon prohibited the vendor from selling its products on its platform.
Litigations on negative review manipulations seem to be raised in relations with defamation laws, as was the case with Jaimyn Mayer in Australia in 2019, or in Canada, regarding fake reviews of doctors.
Interested in learning how to spot and protect yourself from fake reviews? Check out this article by What?
