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They’re pushing for tougher enforcement efforts, along with stronger protections against lawsuits for consumers who post negative reviews for businesses on sites like Yelp.
As digital commerce has exploded over the last several years, state and federal officials can do more to protect consumers and businesses from fake online reviews, according to a new report.
The report, published by the Center for Data Innovation on Monday, called for tougher enforcement of penalties on companies that solicit or write fake reviews. It also urged policymakers to take steps to prevent people from getting hit with lawsuits over negative reviews they write.
Some companies use positive fake reviews to manipulate how consumers see their products or services, while others use negative ones to harm their competitors.
Research shows that online reviews affected $3.8 trillion of global e-commerce revenue in 2020, the report said. Last year, 77% of U.S. consumers said they always or regularly checked online reviews when browsing local businesses, and only 3% would patronize a business with a review score that averages two or fewer stars, according to figures in the report.
The importance of online reviews is twofold, the authors said. They not only help consumers make decisions, but they can also help businesses identify where there is room for improvement.
How “SLAPPs” Hurt Consumers
Policymakers should enact stronger legislation to protect consumers who leave honest reviews from lawsuits, the report also said. Some companies use what’s called a strategic lawsuit against public participation, or SLAPP, in response to negative reviews.
For example, in 2019, a man left a negative review for an emergency animal hospital after the staff failed to inform him there wasn’t a surgeon available to perform the necessary operation for his dog. The dog died before he could be rushed to another hospital.
The animal hospital sued the man, claiming his review was false, malicious and reckless. After a yearlong legal battle, the man was left with $26,000 in legal fees, exceeding his $20,000 yearly income, according to news reports.
The report listed other examples, including lawsuits involving an amusement park in Kansas and a doctor’s office in New York.
These kinds of reactions “effectively silence critics by threatening them with high legal fees, lengthy court cases and similar nuisances,” the report said.
Thirty-one states and Washington, D.C., had anti-SLAPP legislation on the books as of August, but the provisions across jurisdictions are inconsistent. Consumers would be better protected if Congress passed a national anti-SLAPP law that includes allowing courts to award reasonable attorney’s fees and guaranteeing a quick hearing.
The Business of Fake Reviews
In 2013, the New York state attorney general created a fake yogurt shop to solicit offers from companies that leave fake reviews on platforms like Google and Yelp. In all, 19 companies were identified, and the perpetrators agreed to stop writing reviews and pay $350,000 in fines.
While such action is a step in the right direction, more could be done to tackle the issue on a larger scale, the report said.
Attorneys general could more effectively address fake review schemes by working with other state officials and the Federal Trade Commission. These kinds of partnerships can offer greater access to resources and information for investigations, the report said. And, by increasing the likelihood of identifying bad actors and issuing punishments, such action would deter companies from participating in fake review schemes.
State and federal officials should also heighten enforcement and punishment against fake review schemes, the report said. It added that the penalties for participating in such activity need to outweigh any potential profit companies could make with fake reviews.
To read the full report, click here.