No doubt most of you reading this post have looked at Yelp or Google+ Local to check the user reviews before you tried that fish store, bakery or even dentist. On occasion, you may have wondered if some of those reviews were too good to be true.
It turns out that some of them were.
New York's attorney general revealed the results of a yearlong investigation into the business of fake reviews. Eric T. Schneiderman announced Monday that 19 companies that engaged in the practice will stop and pay fines between $2,500 and $100,000, for a total of more than $350,000 in penalties.
Schneiderman said his office used undercover agents. One agent, posing as the owner of a yogurt shop in Brooklyn, called up search engine optimization companies and asked for help in combating negative reviews on consumer websites. In many cases, the agent was told that they would write fake positive reviews for a fee.
One of the reputation companies required its freelancers to have an established Yelp account more than three months old and at last 15 reviews and 10 Yelp friends. The jobs paid the false writers -- who lived as far away as Bangladesh and the Philippines -- between $1 and $10 per review.
The investigation also uncovered businesses that did their own reputation management. For example, US Coachways, a charter bus company on Staten Island, had its employees write positive reviews and offered $50 gift certificates to customers who would do the same -- without requiring those customers to reveal the gift.
Ratings website Yelp says it welcomed the crackdown. However, the company has also been accused of manipulating reviews on its site by merchants who claim Yelp offered to move positive feedback closer to the top of the page for a payment. Yelp denies this.
The practice of putting up fake positive reviews is called "astroturfing" -- the 21st century version of false advertising, which is illegal. "Prosecutors have many tools at their disposal to put an end to it," Schneiderman says.
Business have a lot to gain from astroturfing. A highly cited Harvard Business School study from 2011 found that a one-star rating increase on Yelp can translate into a 5 percent to 9 percent revenue growth for a restaurant. A Cornell study found that one extra star on TripAdvisor is tied to an average of an 11 percent rise in room rates for hotels.
The research firm Gartner projects that by 2014, between 10 and 15 percent of online reviews will be fake. It's hard to know what long-term effects this crackdown and similar law enforcement will have on that number.
Among the 19 companies that are part of the New York attorney general's agreement are search engine optimization company Zamdel Inc., hair removal business Laser Cosmetica and New York City's Metamorphosis Day Spa.
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