With Christmas only two days away and the important Holiday retail season soon ending, the classic movie Miracle on 34th Street comes to mind. Filmed in 1947, the movie features two story lines that seem as relevant today as they were 70 years ago: corporate competition and reputational value.
Winner of three Academy Awards, the backdrop to Miracle on 34th Street was the fierce competition that took place between two New York department store giants, Macy’s and Gimbels. (Interesting facts regarding Gimbels include that it was the originator of the Thanksgiving Day Parade, it once owned Saks and it was the largest department store in the world in the 1950s.) Fast forward to today, and retail and consumer product competition seems just as stiff, if not worse, but the giants have changed names to Walmart and Amazon. The movie shifts to a more personal level when the climax centers around whether Kris Kringle is who he says he is – Santa Claus. Fast forward to today, and the feature of modern shopping that facing its own crisis of authenticity is online product reviews.
Overly eager endorsements and artificial ratings have been around for a long time, but the issue of online fake reviews has become a wide-spread epidemic in recent years. Fakespot, a company with a mission of identifying fake reviews, estimates that 52% of reviews posted on Walmart.com are “inauthentic and unreliable”. Fakespot estimates that 33% of Amazon reviews are fake or unreliable. Fake reviews are those generated by robots or provided by people compensated to write them.
On Amazon, sellers look to get any advantage they can, and some rely on fake information. Better reviews result in higher search rankings, which lead to increased sales. And the cycle perpetuates. Last year, 58% of all Amazon sales came from third-party sellers ($160 billion), and one million new sellers joined the marketplace. With thousands of new sellers signing up each day, there is intense competition. A sizeable subset of these companies are willing to give away free products in return for positive reviews. According to Nuanced Media, the scheme is designed to dupe Amazon’s algorithm by creating the illusion that a product is flying off the shelves. Recognizing that better reviews provide better search results, the ecommerce consulting firm Pattern estimates that a 1-star increase in a product’s average rating leads to a 26% increase in sales.
A common cheating tactic is for sellers to post Facebook ads offering free product. Once communication is established via Facebook Messenger, a tacit agreement is made where the consumer makes the purchase, and, once a positive review is written, a full refund is subsequently made via PayPal. Alternatively, BuzzFeed News has reported on “black hat” services that offer to remove negative reviews from product pages, exploit technical loopholes to lift overall sales rankings, and bribe Amazon employees to leak sensitive information.
Walmart and Amazon argue that they are taking great pains to address fake reviews. Amazon claims to have spent $400 million last year to protect customers from review abuse and estimated that it prevented 13 million attempts to post inauthentic reviews. In a statement to CBS MoneyWatch, Walmart claimed to monitor all reviews. Yet, issues at Amazon remain, and Walmart has been known to post product reviews that originated from other sources.
The breadth and the depth of the problem has drawn the attention of the Federal Trade Commission, which is now filing suit against such bad characters. The FTC Director of Consumer Protection has expressed, “People rely on reviews when they’re shopping on-line. When a company buys fake reviews to inflate its ratings, it hurts both shoppers and companies that play by the rules.”
While there are clear efforts underway in the government and elsewhere to make the internet safer and more trustworthy for consumers, counterfeit reviews can be added to the list of things that make some of us nostalgic for simpler times. Like 1947. At the close of Miracle on 34th Street, [spoiler alert] the New York Post Office delivers 21 full mailbags of letters from young boys and girls to Kringle, effectively verifying his identity. No one needed to ask how many of those letters were written by robots.
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