Ripping Up the Astroturf: New York Settles With Nineteen Companies Accused of Posting Fake Consumer Reviews Online

September 26, 2013

Thursday, September 26, 2013, by Ryan Niland
Regulators in New York announced a settlement this week with more than a dozen companies it accuses of posting false and misleading customer reviews online.  The settlement, reported to be worth over $350,000, is the culmination of a yearlong investigation by the New York Attorney General’s Office called “Operation Clean Turf.”  The operation’s name is a play on the term “Astroturfing,” which refers to the practice of concealing the source of a marketing or public relations campaign so that it appears to have come from members of the public at large.
To execute Operation Clean Turf, regulators created a fake yogurt shop in Brooklyn and solicited the assistance of several “reputation-enhancement firms” that offer legitimate search engine optimization services.  Several of these firms also volunteered to post fake reviews of the yogurt shop online on sites such as Yelp and Google.  The investigation also uncovered several companies that posted fake reviews of their own services online.
Although Astroturfing has long been associated with low-cost services like restaurants and hotels, Operation Clean Turf uncovered fake reviews for a wide range of professionals including dentists, lawyers, and an ultrasound clinic.  For example, the chief executive of the US Coachways, a charter bus service, responded to his company’s low ratings on Yelp by hiring freelance writers, requiring employees to post fake reviews, and even posting a five-star review of his own.  In one particularly egregious case, an employee of the digital marketing firm posted a fake review of his own firm on Yahoo!, complete with an explicit denial that the reviewer had any connection to the company.
Online reviews have a major impact on producer and consumer behavior.  According to the Attorney General, 90% of consumers claim that online reviews influence their buying decisions.  A 2011 Harvard study found that raising a restaurant’s rating on Yelp by one star can lead to a 9% increase in revenue.  Researchers at Cornell estimate that a one star bump in a hotel’s rating on TripAdvisor allows the hotel to increase its room rates by 11% without adversely affecting occupancy rates or market share.

According to the Attorney General, “’Astroturfing’ is the 21st century’s version of false advertising, and prosecutors have many tools at their disposal to put an end to it.”

Given this strong market pressure and the relative anonymity of Internet traffic, it isn’t surprising that hiring a company or freelance writer to post fake customer reviews online is both cheap and easy.  As a result, one recent study found that 20% of reviews on Yelp are fraudulent.
According to the Attorney General, “’Astroturfing’ is the 21st century’s version of false advertising, and prosecutors have many tools at their disposal to put an end to it.”  Chief among the tools cited by the Attorney General are New York’s prohibitions against fraud, unfair and deceptive trade practices, and false advertising.  But while these 20th century tools may provide a remedy for the most egregious forms of deceptive online advertising, even non-fraudulent reviews may be tainted by bias or conflicts of interest.  For example, a Cornell study found that 85% of the most prolific reviewers on Amazon receive free products from publishers, agents, and manufacturers.  Although law enforcement operations like Operation Clean Turf are an excellent start, legislative action may be needed to fully protect consumers from misleading online customer reviews.