Recently, researchers at Harvard Business School published a report about a study about fake online reviews. Typically, a company or hired vendors write the fake online reviews. The researchers studied fake reviews at the Yelp.com site about restaurants in Boston, and found:
"First, roughly 16 percent of restaurant reviews on Yelp are identified as fraudulent, and tend to be more extreme (favorable or unfavorable) than other reviews. Second, a restaurant is more likely to commit review fraud when its reputation is weak, i.e., when it has few reviews, or it has recently received bad reviews. Third, chain restaurants - which benefit less from Yelp - are also less likely to commit review fraud. Fourth, when restaurants face increased competition, they become more likely to leave unfavorable reviews...
The researchers labeled certain business behaviors: "positive review fraud" when a business engaged in creating fake, positive reviews about itself, and "negative review fraud" when a business engaged in creating fake, bad reviews about a competitor. The study methodology used Yelp's formulas for identifying bogus reviews. At the time of the study, Yelp had about 30 million online reviews and 100 million unique visitors per month.
The researchers cited results from other studies that focused on other industries:
"... Mayzlin et al. (2012) exploit an organizational difference between Expedia and TripAdvisor (which are spin-os of the same parent company with different features) to study review fraud by hotels: while anyone can post a review on TripAdvisor, Expedia requires that a guest has "paid and stayed" before submitting a review. The authors observe that Expedia's verification mechanism increases the cost of posting a fake review. The study finds that independent hotels tend to have a higher proportion of five-star reviews on TripAdvisor relative to Expedia and competitors of independent hotels tend to have a higher proportion of one-star reviews on TripAdvisor relative to Expedia..."
The findings in this study probably explain the motives by 19 companies exposed last week and fined for astroturfing by the New York State Attorney General. Desperate companies and executives do desperate things. It isn't right, but they do it. And, they will continue committing online review fraud as long as:
The probability of getting caught X the probability of getting sued X the probability of paying a fine (or going to jail) < the amount of revenues generated by fake online reviews
What are consumers to do? Right now, learn how to spot fake reviews. Some of the links below can help. I hope that the attorney generals in more states investigate and prosecute online review fraud. These fraudsters need to be exposed publicly.
Download the Harvard Business School report, "Fake It To You Make It: Reputation, Competition, And Yelp Review Fraud" (Adobe PDF). Learn more about online reviews: