FAKE

ONLINE
REVIEWS
LAW AND ECONOMIC
ANALYSIS

BY : Kinjal Asmi

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ABSTRACT

As the use of technology has paved way for online e-commerce platforms and facilitated
online shopping, the emerging trends of online fake reviews pose a great threat to society as
well as undermine the credibility of information that is provided on the internet. This paper
helps to understand the origin of fake reviews as well as study the impact of fake reviews in
our day- to-day life. This paper also involves the use of economic principles to explain the
basic concepts in terms of social costs and indirect costs. This study also analyses the legal
aspects of fake reviews. Further this also helps in acknowledging the consumer rights and the
remedies available to them under Consumer protection Act that can be sought to address this
issue to some extent. Furthermore, this paper also analyses the steps taken by companies such
as Amazon to clamp down on such reviews.

INTRODUCTION –
From Google maps to amazon, it's important to maintain a consistent 5-star rating and
flawless review, especially in an era where the customers solely rely on online reviews.
Nowadays who doesn’t go through the ratings available on the internet before choosing the
right restaurant or purchasing something as small as a hairdryer or when it comes to online
shopping and availing services such as airlines, hotels. But it’s not surprising to see that in a
world where that in a society where ratings and opinions have become the mainstays of our
way of life and the basis for our decision-making, there are people who are manipulating the
reviews in their favour thereby cheating the system by getting paid reviewers in order to
boost the ratings. Thus, a solid framework is needed to combat such menace.

PRINCIPLES, AIM AND OBJECTIVES

The following are the key points that this research aims to explain

1. To analyze the factor governing fake online reviews

2. To study the impact of fake online reviews on consumer behavior
3. To understand the law governing this phenomenon
4. To come up with possible solutions

SCOPE:
1. This research is limited to application of economic tools on existing empirical data
and study of trends.
2. To realize the far-reaching consequences of fake online reviews

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LIMITATIONS:

1. The information mainly relies on secondary data available on the internet

2. The data provided on the internet was limited
3. The sample questionnaire which was studied only includes a limited number of people

METHODOLOGY

Research Design: This research follows the following methodology:

Empirical: The research is based on investigation that relies upon experimentation and
systematic observation.

Analytical: This research is based on analyzing the fake online review market industry and the
impact associated with it.

Quantitative: The research relies on quantitative data obtained from first hand observation in
the form of questionnaires filled by a handful of people.

Economic tools: Cost-Benefit analysis , Indirect costs

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 E-COMMERCE INDUSTY :
THE FASTEST-GROWING
INDUSTRY

With 69% of the world’s population, or 4.9 billion people, actively using the internet in 2022,
the digital economy is equivalent to 15.5% of global GDP1. India’s alone, digital economy
will become worth $1 trillion by 2025. 2In the words of Tim Berners Lee, who is considered
the father of the internet made sense when he said that : Although the internet has created
new possibilities, given marginalized groups a voice, and made our everyday lives, more
convenient it has also given fraudsters a platform, given those who advocate hatred a voice,
and made it easier to commit all forms of crimes.3

1
2022. [online] Available at: < https://www.worldbank.org/en/topic/digitaldevelopment/overview > [Accessed
18 August 2022].
2
The Statesman. 2022. India's digital economy to be worth $1 trillion by 2025: PM - The Statesman. [online]
Available at: < https://www.thestatesman.com/india/indias-digital-economy-worth-1-trillion-2025-pm-
1503083429.html > [Accessed 18 August 2022].
3
World Wide Web Foundation. 2019. 30 years on, what’s next #ForTheWeb. [online] Available at:
< https://webfoundation.org/2019/03/web-birthday-30/ > [Accessed 18 August 2022].

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One of the fastest growing sectors in India is without any doubt is the E-commerce industry.
India’s online retail landscape is expected to reach US$ 111 billion by 2024 and US$ 200
billion by 2026 and US$ 350 billion by 20304.This is an indication of robust growth of
India’s retail sector. Also, the government estimates that India's e-commerce market was
worth more than $55 billion in gross merchandise value in 2021 and will grow to $350 billion
by the end of this decade.5

4
India Brand Equity Foundation. 2022. E-commerce in India: Industry Overview, Market Size & Growth| IBEF.
[online] Available at:< https://www.ibef.org/industry/ecommerce#:~:text=US%24%20350%20billion.-
, India’s%20e%2Dcommerce%20market%20is%20expected%20to%20reach%20US%24%20111,in%20internet
%20and%20smartphone%20penetration.> [Accessed 18 August 2022].
5
2022. What is ONDC, India's project for an open e-commerce network? [online] Available at: <
https://www.euronews.com/next/2022/06/02/india-ecommerce-ondc- explainer#:~:text=The%20government
%20estimates%20that%20India's,the%20end%20of%20this%20decade.
> [Accessed 18 August 2022].

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 LEGAL ASPECT OF FAKE
REVIEWS

CONSUMER PROTECTION ACT 2019

The Consumer Protection Act, 2019 empowers the central government to promote, protect
and uphold the rights of the consumer. Under the act, Central Consumer Protection Authority
(‘CCPA’) will have the onus to investigate, recall, refund and impose penalties. It also
regulates matters regarding violation of consumer rights, unfair trade practices, and
misleading advertisements. In addition to this, there is also a provision to ensure that rights of
consumers are safeguarded upon through class action lawsuit. The law makes a provision that
for a dishonest or deceptive advertisement, the authority which have the jurisdiction can fine
a producer or an endorser up to Rs 10 lakh6.

Section 10(1) of the New Act makes a provision for establishment a Central Consumer
Protection Authority to oversee matters relating to the violation of consumers' rights, unfair
business practices, and false or deceptive advertisements that are detrimental to the interests
of the public and consumers, as well as to promote and protect them.7

As per Section 2(28) of the New Act, “misleading advertisement” in relation to any product
or service, means an advertisement, which8—

(i) falsely describes such product or service; or (ii) gives a false guarantee to, or is
likely to mislead the consumers as to the nature, substance, quantity or quality of
such product or service; or
(ii) conveys an express or implied representation which, if made by the manufacturer
or seller or service provider thereof, would constitute an unfair trade practice; or

6
Antal, S., 2020. New Consumer Protection Act, 2019- False & Misleading Advertisements. [online] Tax Guru.
Available at: < https://taxguru.in/corporate-law/consumer-protection-act-2019-false-misleading-
advertisements.html > [Accessed 18 August 2022].
7
Consumer Protection Act, 2019 §10, No 35, Acts of Parliament, 2019
8
Consumer Protection Act, 2019 §2, No 35, Acts of Parliament, 2019

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 (iii) deliberately conceals important information;

Under the 2019 Consumer Protection Act in India, false reviews endanger the rights of
consumers. According to the Act, customers are entitled to information on the "quality,
amount, potency, purity, standard, and pricing of commodities, products, or services". Due to
fake and misleading reviews, it results in the violation of the right to be informed, which is a
consumer right under Consumer Protection Act.”9

Hence, writing a fake review can attract penalty as is considered to promote unfair trading,
which falls under consumer protection laws.

A LACUNA
Although the consumer protection act doesn’t specifically talk about fake reviews, the rule 6
of the Consumer Protection Act (E-commerce rules) that was enforced in 2020 explicitly
states that “no such seller shall falsely represent itself as a consumer and post review 10”.
However, this scope is limited as it doesn’t extend to all fake reviews. In addition to this, this
act governs misleading advertisements and deceptive trends of the sellers and keep them in
check. However, the anonymity of the reviewer on the internet makes it difficult to pursue
legal action. It becomes very difficult to track the location of the person as upcoming
technologies and algorithms are coming into play. In addition to that, it is not uncommon to
hear or read about businesses suing individuals over defamatory and false online reviews.
However, doing so can be expensive11.Therefore, there is this lacuna that needs to be
addressed through a robust mechanism.

In 2021, at the meeting of the Rajya Sabha Standing Committee, it was discussed that the
Central Consumer Protection Authority (CCPA) will establish an investigation wing to curb
fake reviews with Director General, acting as its head. It will work as oversight mechanism.

9
Pib.gov.in. 2022. Fake reviews on E-Commerce platforms under Centre’s radar. [online] Available at: <
https://pib.gov.in/PressReleasePage.aspx?PRID=1828485 > [Accessed 18 August 2022].
10
Pandey, S., 2021. Got fooled by product rating, reviews on e-tailer site? MPs’ panel has a plan to fix this.
[online] Available at: < https://theprint.in/india/governance/got-fooled-by-product-rating-reviews-on-e-tailer-
site-mps-panel-has-a-plan-to-fix-this/636083/ > [Accessed 18 August 2022].
11
Rocket Lawyer. n.d. How To Fight Back Against a Bad Online Review - Rocket Lawyer. [online] Available at:
< https://www.rocketlawyer.com/business-and-contracts/business-operations/legal-guide/how-to-fight-back-
against-a-bad-online-review > [Accessed 18 August 2022].

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Most importantly, these domain experts will act as content moderators to help report fake
reviews as well as investigate them.12

Adding to this, recently the Union government came up with the idea to adopt a framework to
curb fake product reviews on e-commerce sites after assessing the globally accepted
standards and practices. The department of Consumer Affairs (DoCA) stated that online fake
reviews pose a major problem. Accordingly, it stressed the need to develop a framework to
curb them. Since e-commerce involves virtual shopping where the product cannot be
physically seen and examined, customers heavily depend on reviews available on these e-
commerce platforms to make an informed choice by going through opinions and experiences
of previous purchasers. Thus, it becomes imperative to check the product or service. 13

12
Pandey, S., 2021. Got fooled by product rating, reviews on e-tailer site? MPs’ panel has a plan to fix this.
[online] Available at: < https://theprint.in/india/governance/got-fooled-by-product-rating-reviews-on-e-tailer-
site-mps-panel-has-a-plan-to-fix-this/636083/ > [Accessed 18 August 2022].
13
Anon, 2022. Centre to develop framework to check fake reviews on e-commerce sites. The Indian Express.
Available at: https://indianexpress.com/article/india/india-ecommerce-sites-fake-reviews-guidelines-7940758 /
[Accessed August 18, 2022].

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 ONLINE FAKE
REVIEWS : AN
ANALYSIS

I. THE BOOMING MARKET:

According to a new report, online reviews will have an impact on $3.8 trillion of worldwide
e- commerce spending in 2021.14 It was estimated that 4% of all online reviews are fraudulent
based on official statistics and self-reporting by the world's top e-commerce sites, including
TripAdvisor, Yelp, Trustpilot, and Amazon15. If we calculate in terms of economic impact,
the direct influence of fake online reviews accrues to global online spending of $152 billion,
according to the World Economic Forum. 16. Fake online reviews have a yearly impact on e-
commerce expenditure of $791 billion in the US, $6.4 billion in Japan, $5 billion in the UK,
$2.3 billion in Canada, and $900 million in Australia. 17.

14
Blog.datahut.co. 2021. E-commerce brands and their battle with fake online reviews. [online] Available at: <
https://www.blog.datahut.co/post/e-commerce-brands-and-their-battle-with-fake-online-
reviews#:~:text=According%20to%20a%20new%20study,the%20seller%20to%20the%20buyer. > [Accessed 18
August 2022].
15
Marciano, J., 2021. Almost 4% of all online reviews are fake. their impact is costing US $152 billion. The
Print. Available at: https://theprint.in/opinion/almost-4-of-all-online-reviews-are-fake-their-impact-is-costing-
us-152- billion/715689 / [Accessed August 18, 2022].
16
Marciano, J., 2021. Fake online reviews cost $152 billion a year. here's how e-commerce sites can stop them.
World Economic Forum. Available at: https://www.weforum.org/agenda/2021/08/fake-online-reviews-are-a-152-
billion-problem-heres-how-to-silence-them / [Accessed August 18, 2022].
17
Marciano, J., 2021. Almost 4% of all online reviews are fake. their impact is costing US $152 billion. The
Print. Available at: https://theprint.in/opinion/almost-4-of-all-online-reviews-are-fake-their-impact-is-costing-
us-152- billion/715689 / [Accessed August 18, 2022].

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II. HOW DOES THIS WORK?

The impact of fake reviews is very much different. Platforms like Amazon have a rating and
review system which instill confidence within the consumers to influence their purchasing
decisions that helps e-commerce to function. These elements have a big influence on search
rank algorithms, which has a significant impact on product exposure and sales. These systems
typically provide sellers with strong incentives to manipulate the rankings of their products
by posting fictitious reviews.

One of the most popular methods for obtaining these reviews was discovered to be through
exclusive Facebook groups. Sellers would further take advantage of these groups to entice
customers to buy their items, provide a sincere review with a rating of five stars, and then get
payment via PayPal for the cost of the product, any relevant taxes and fees, as well as a
commission of $5 to $10. Additionally, these groups would gradually vanish and then get
replaced by groups of same kind. The question is if fake reviews are an effective sales
strategy. According to research, after two weeks of merchants hiring reviewers, the average
rating of their items rose by 0.16 stars, and the average number of reviews they got each
week quadrupled from five to an average of 10. It's possible that some of these reviews are
legitimate, i.e., from actual, unpaid consumers, given that the spike in reviews happens
immediately after merchants start buying fake reviews. However, the timing of the
increase in reviews— immediately following the purchase of the fake reviews—indicates
that the fake reviews are actually to blame for the rise which leads to favorable results: These
items had an average 12.5% rise in their sales due to the increase in reviews.18

But this boost is short-lived. To combat the "cold start" issue i.e., the high-quality products
without any reviews that struggle to attract attention, the Companies employ false reviews.
Real and genuine buyers then purchase these items and provide honest feedback when the
false reviews gain a positive reputation with them. But after a few months, the increase in
sales, reviews, and ratings gets fizzled away, indicating that the goods were actually of
inferior quality, and the exaggerated ratings and reviews duped customers.19

18
Stieb, M., 2022. How serious is Amazon about stopping fake reviews? Intelligencer. Available at:
https://nymag.com/intelligencer/2022/07/amazon-fake-reviews-can-they-be-stopped.html / [Accessed August
18, 2022].
19
Ibid.

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III. THE ECONOMY OF THE ONLINE REVIEWING INDUSTRY

It appears to be fairly simple to buy fake reviews. Interestingly, The CBC, a Canadian
broadcaster, looked into its operation in 2014. Without actually delivering the product, the
CBC team constructed a website for a hypothetical food truck to test how popular it would
become online. Although the magnitude of the fake review market is yet unknown, research
by the UK- based consumer group suggests that over 53,000 products on Amazon may have
profited from incentivized fake reviews. 20

IV. A HUGE PROBLEM

In a recent LocalCircles poll in 2022, 58% of respondents claimed that e-commerce websites
don't display their reviews that were critical. It was shown that 64% of people visit e-
commerce websites to read evaluations and reviews. Nearly 65% of people believe that
product reviews are biased in favour of the seller, which suggests that they may be doing
so. Only 18% of respondents thought evaluations were
accurate. According to a comparable poll conducted in 2019, 62% of
consumers said most product revi ews were biased in favour of the seller, while just 14%
believed the reviews were truthful. In the previous 12 months, 80% of consumers who used
ecommerce sites reported experiencing at least one situation where a highly rated product fell
short of their expectations. Ironically, there were 23% of consumers who
stated that their opinion was “published as it is.”21 The percentage of customers whose
unfavourable reviews or ratings were removed by E-commerce platforms increased from
47% in 2019 to 58% in 2022. Additionally, in the same time frame, the proportion of
residents who say their reviews are published fell from 27% to 23%.

Last year, according to a TripAdvisor analysis, the country with the highest percentage of
22
paid reviews was India. Amazon has filed a lawsuit against more than 10,000
administrators of Facebook groups, claiming that they conspired to submit false
evaluations in exchange for

20
ARAI, C., 2022. Fake online reviews. Blog Economie Numérique. Available at: https://blog.economie-
numerique.net/2022/05/19/fake-online-reviews / [Accessed August 18, 2022].
21
Shinde, S., 2022. 58% e-commerce consumers say their negative ratings not published: Survey. Business
Standard. Available at: https://www.business-standard.com/article/companies /58-e-commerce-consumers-say-
their-negative-ratings-not-published-survey-122062800022_1.html [Accessed August 18, 2022].
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22
Ians, 2021. India topped list of countries from where most paid reviews for Tripadvisor emanated. Mid.
Available at: https://www.mid-day.com/lifestyle/travel/article/india-topped-list-of-countries-from-where-most-
paid-reviews-for-tripadvisor-emanated-23198439 [Accessed August 18, 2022].

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money or free goods. Sometimes fake reviews can be used as a threat to blackmail them into
giving a refund to the customer.23

This static shows the findings of a 2017 survey on the notion that fraudulent reviews of
products have become the standard in the e-commerce sector. 72% of respondents which
included consumers of India concurred to the study that fraudulent product reviews have
become the norm when it comes to E-commerce industry.24. This clearly suggest that
consumers have been victims of fake online reviews and maybe as a result lost trust in the
brand because of this. Even in 2022, this fact holds true even for today. The problem of fake
reviews poses a large problem to the society, especially when we are transitioning to the
digital age.

23
Ians, 2022. Amazon has sued over 10,000 Facebook Group Admins over fake reviews. News18. Available at:
https://www.news18.com/news/tech/amazon-has-sued-over-10000-facebook-group-admins-over-fake-reviews-
5582299.html [Accessed August 18, 2022].
24
2022. India - belief that fake product reviews have become a norm 2017. Statista. Available at:
https://www.statista.com/statistics/830577/india-belief-that-fake-product-reviews-have-become-a-norm-
according-to-consumers / [Accessed August 18, 2022
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 ECONOMIC
CONCEPTS

I. COST-BENEFIT ANALYSIS:

C
O
S
T
S

B
E
N
E
F
I
T
S

For starters, all people like free stuff. Basically, third party sellers’ prey on megaretailer’s
reviews section by sending complementary goods to real people in exchange for glowing
write- ups even if the product is of inferior quality. The scam is pretty simple. An
organization producing generic goods in Shenzhen or Chennai hires an intermediary to create
a Facebook group, Twitter account, or Telegram channel with a catchy name to lure
consumers who hoping for free merchandise Tens of thousands of people join private
forums like "Amazon Product

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Review" who are willing to write a few phrases and take a few images in exchange for a
product—and perhaps $5 to $10.25

1.1 BENEFIT -

The business of reviews is a big one. Thus, a lot of money is being doled out in the process.
According to an analysis by the e-commerce consultant Pattern, a one-star improvement on
an Amazon listing can boost sales by as much as 26 percent. This becomes a lucrative for all
the fraudulent buyers.

1.2 SOCIAL COST –

The monetary hardships that is incurred while we purchase a product based on fallacious and
inaccurate feedback might very well be vexing, but these fraudulent reviews can have even
more significant repercussions.

Let's say a company that sells cheap child car seats fabricates a number of positive reviews
that extol the advantages of the product while falsely claiming that it has superior safety
features. Having no reason to question the validity of the ratings, a parent who sees those
fictitious reviews decides to purchase the car seat for their child. It's possible that a parent
will never come across a circumstance where the value of the car seat is questioned or put to
test, but what if it does? What if they find out that, instead of the extremely safe and tested
device they had relied on under false pretenses, they actually have an inferior piece of
equipment?26

Whatever the case might be, there’s no guarantee that such a thing might not to lead to
accidents or worse, death. Granted, not every product has such high or severe stakes; but, a
bogus favorable review for a pizza may result in an unpleasant dinner or, even food
poisoning, but there can always be such a possibility.

II. INDIRECT COSTS:

1.1 COST OF TRANSPARENCY

25
Stieb, M., 2022. How serious is Amazon about stopping fake reviews? Intelligencer. Available at:
https://nymag.com/intelligencer/2022/07/amazon-fake-reviews-can-they-be-stopped.html [Accessed August 18,
2022].
26
Anon, 2020. The rising prevalence of fake online reviews and how to spot and STOP THEM: J. Fitzgerald
Group: Buffalo, NY. J. Fitzgerald Group | Buffalo, NY. Available at: https://jfitzgeraldgroup.com/fake-online-
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reviews / [Accessed August 18, 2022].

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Unlike direct costs, indirect costs can be used to calculate the cost of harm, and for better
understanding of estimates, both monetary and non-monetary consequences of harm should
be taken into account. The quality of life, the level of anxiety, or behavior changes might all
be impacted by such indirect costs. Some of the researchers concluded that the less obvious
consequences are what make crime the most expensive of all human endeavours.27

1.2 ENFORCEMENT COSTS

Our $152 billion direct loss must be offset by a significant indirect cost, which is the
enormous expense of legal proceedings initiated by governmental entities and businesses
battling one another over how they are allegedly handling bogus reviews28. Millions of dollars
can be spent on enforcement expenses, legal fees, court costs, executive and staff time, and
litigation related to fraudulent reviews. However, as the significance of ignoring false reviews
has become a corporate-wide concern, there has been a greater demand for prosecutions.

1.3 ECOMMERCE INVESTMENT DONE BY ECOMMERCE PLAYERS

The enormous effort and resources needed to address the issue is also included in indirect
expenses along with considerable time. In order to reduce fraud and abuse, Amazon spent
more than $500 million and hired more than 8000 workers in 2019. Similarly google also
embraced the use of new "Product Reviews Algorithm" to address this issue.

1.4 THE EFFECTS OF FAKE REVIEWS ON BUSINESS REVENUE

Negative reviews may have a detrimental economic impact on businesses. In one instance, an
Australian plastic surgeon stated that the week after the publication of a fake review, his
clientele fell by 23%. In a court case -United States District Court Eastern District of
California, California based Super Mario Plumbing said their business dropped 25% and
were forced to reduce the work of two employees as a result of a competitor's fake review.
Another dumpling restaurant in Ottawa described the time and money they invested, saying
that it took 10 days for 13 years’ worth of labour to break down.29

27
Anon, The economic cost of bad actors on the Internet Fake Online Reviews 2021. Available at:
https://f.hubspotusercontent00.net/hubfs/5228455/Research/Fake%20Online%20Reviews%202021 .pdf
[Accessed August 18, 2022].
28
Pant, H., 2022. Effect of fake reviews on shopping. LinkedIn. Available at:
https://www.linkedin.com/pulse/effect-fake-reviews-shopping-himanshi-pant / [Accessed August 18, 2022].
29
Anon, The economic cost of bad actors on the Internet Fake Online Reviews 2021. Available at:
https://f.hubspotusercontent00.net/hubfs/5228455/Research/Fake%20Online%20Reviews%202021.pdf
[Accessed August 18, 2022].

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1.5 LOSS OF TRUST AND CONFIDENCE

A poll found that 85% of consumers thought that the reviews they came across were
sometimes or often fraudulent which resulted in a loss of trust in the product. Not only that
but according to the same survey, 28% of participants shared their concerns that fake reviews
would make them suspect legitimate reviews and 26% stated that it would make them
distrust the brand.

1.6 ASYMMETRIC INFORMATION

Asymmetric information exists in the online market place as one party i.e., seller possesses
more, or more detailed, information than the other i.e., buyer. Customer reviews help to
lessen the information asymmetry that frequently exists in online markets where buyers
frequently lack information about the vendor and have no opportunity to physically inspect
the item or service before making a purchase.30 But sometimes the reviews can be
manipulated to suit the interests of the seller. Thus, fake reviews can facilitate the purchase of
bad quality products resulting in information asymmetric.

30
Anon, 2022. E-commerce: How the 'fake review' economy works. Swarajyamag. Available at:
https://swarajyamag.com/business/e-commerce-how-the-fake-review-economy-works
[Accessed August 18, 2022].
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 INDUSTRIES THAT ARE
MOST AFFECTED BY FAKE
REVIEWS

1. RESTAURANT INDUSTRY

A review can be proved to make or break the opportunity to attract consumers especially in
such a competitive industry. An interesting fact: Online reviews are taken into consideration
by over 60% of clients when deciding which restaurant or bar to visit. In Chicago, a
restaurant was targeted where fake reviews left a one-star rating. After that, they emailed
them demanding monetary payments in return for the reviews' deletion. According to studies,
giving a restaurant a star on Yelp can increase sales by 5% to 9%. Therefore, there is little
doubt as to how consumers prefer restaurants that have higher ratings and how one fake
negative review can cost them!!

2. HOSPITALITY INDUSTRY

Assessing the calibre of our stay whether in a hotel or a resort has become a common thing
especially when everything is only a click away. The hospitality industry is also rife with
examples where people have shared fake reviews. When away from their homes, people
become highly selective about where they wish to stay. According to some studies, a single
bad review , particularly if they are negative, on a hotel or motel might cost the equivalent of
30 reservations.

3. FASHION INDUSTRY

Fashion Industry is also one of the industries that is very much affected by fake online
reviews. Although most attention is given to fake reviews, there are experts that claim that
sellers are also manipulating customer perception in other ways. These practises include
using review practises to their advantage, selectively soliciting comments, and in some cases,
completely ignoring negative feedback. This also widens the misuse of fake reviews. In
January 2022, Popular fast-fashion apparel retailer Fashion Nova had to pay $4.2 million to
resolve claims that it blocked customer ratings for items that received less than four out of
five stars.

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 FAKE ONLINE REVIEWS : STUDY ON CONSUMER TRENDS – A QUESTIONNAIRE

This questionnaire encompasses the impact of reviews on consumer trends in general and
how fake reviews can limit the scope of buying even more hampering the decision making of
the consumer. It also reflects how they gauge a product based on the reviews. These are the
questions and the results are as follows :

1. How often do you check a product's review before buying it ?

Unlikely; 2.80%

Likely; 22.30%

Most Likely; 74.90%

Unlikely Likely Most Likely

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Out of 36 responses , almost 27 respondents (74.9%) stated that they like to go through
reviews before buying a product whereas the rest stated that it is very unlikely of them to go
through reviews. This clearly indicates the influence of reviews on people who buy the
product after reading the reviews. As the greater proportion of the consumer base includes
review check as one of the primary activities before shopping, the impact of fake reviews is a
considerable threat to consumers. In fact, only 2.80% are unlikely to check the reviews,
reflecting that reviews influence the decision making of almost all probable customers. This
data also gives us the cause and roots of the “Fake reviews” scam. As there is demand of high
reviews, businesses resort to this method of creating bogus reviews in order to accelerate
their business growth.

2. Are you aware of the fake online review industry ?

No
17%

Yes
83%

Yes No

Almost 29 respondents (82.9%) out of 35 stated that they know about the fake online review
industry whereas the rest of the respondents were unaware of this illegal industry. This
suggests that online fake reviews industry is very prominent. One inference of this data is
that, 83% people have experienced or seen people experience the negative effects of the fake
reviews. As the difference between the promised product or service and the delivered one

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is substantial

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enough to notice and regret the decision of purchasing the same. This also displays the need
of authentication checks of every review, so that sellers and marketers can’t deceive the
customers on a regular basis. In addition to this, the rest 17% of the focus group in this
research represent that part of our community that needs to be educated regarding the
existence of fake reviews, and how to differentiate the authentic reviews from the bogus ones.

3. Where do you read online reviews ?

Amazon
47%

Google
53%

Google Facebook Amazon

Out of 36 responses , almost 19 respondents (52.8%) read reviews which are available on
google and the remaining prefer Amazon. Hence, it becomes more imperative for online sites
hosted by google to display credible information on their site as many people rely on those
sites to make an informed choice. Interestingly, the focus group of this research study didn’t
believe social media platforms for reviews, which represents the mind-set of the consumer
base. They clearly find it difficult to believe the statistics shown just on social media, which
is a good start. The next step is to educate them on the key pointers that will help them
distinguish between genuine reviews and fake reviews.

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 4. Do you find online reviews helpful and does it influence your purchasing decisions ?

No
3%

Yes
97%
Yes No

Out of 36 responses , 35 respondents (97.2%) stated that they find online reviews very
helpful when it comes to buying a product or service. This clearly indicates the influence of
online reviews on decision-making of people. Hence, there are all the more reasons to address
this issue. So, apart from the features, characteristics, warranty and other selling points in an
advertisement or product presentation, reviews have become an integral point on the checklist
of consumers that can influence their decision making. This also explains the rise of the
“Fake reviews” topic in today’s digital marketing era. The sheer demand of the consumer to
have a look at the rating of the product before even considering to buy it has given birth to
the needs of a really good rating average, which in turn is assured by fake reviews.

5. Would you buy a product if it's suspected to have fake reviews?

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 Yes
3%

No
97%
No Yes

Out of 36 responses, 35 respondents(97.2%) stated that they won’t buy products that are
suspected to have fake reviews. Again, this indicates the possible influence of fake reviews
will affect their decisions when it comes to buying or availing services. People can hesitate to
purchase even if there is a slight chance of a review being fake. Now, this also represents the
importance of revealing the fake reviews, as it would immensely influence the decision
making of the consumer. There has to be an assurance of every review that it is genuine, then
only can the consumer get the unbiased review of the commodity or the service. This also
possesses a threat to business owners, as if 1 fake review, which may or may not be
submitted by them can question the integrity of their entire business practice.

6. How often have you come across fake reviews ?

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 Often, 47%

Not very Often, 53%

Often Not very Often Never

Almost 17 respondents( 42.2%) out of 36 have come across fake reviews in some way or the
other. Although there is still a large number of people who have come across these reviews ,
but not very often. Thus, it is safe to infer that although fake reviews are not well known, but
still, they are prevalent. In addition, this, this data also reveals that the majority of the
population has maybe not been able to identify fake reviews. As the fake review generation is
at an all- time high, it’s difficult to believe that any product doesn’t have even 1 fake review.
Thus, the introduction of tools that can help consumers identify these fake reviews are of
utmost importance.

7. Have you avoided a company because of negative reviews ?

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 Maybe
17%

Yes
83%

Yes Maybe No

Out of 36 responses , 30 respondents admitted that they have avoided a company because of
negative reviews. There is a probability of a negative review being fake. Hence, this also pose
a huge problem to consumers who are purchasing online. More than the customers, this is
threat to the business owners and retail sellers. As the integrity if the seller comes into
question as soon as a fake review is identified, customers automatically will start avoiding
that particular seller. In monopolistic and oligopolistic markets, the negative fake reviews are
a method used to bring down competitors. Basically, these fake reviews are also used as a
method to decrease the competition in the market by hurting the reputation of the
competitors. So, a proper authentication system would not only protect consumers in the long
run, but also the business enterprises from fraudulent practices in the pressure of intense
competition.

8. Would you engage with a company that has an average rating of 1 or 2 stars ?

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29 | P a g e
 Maybe
11%

No
89%

Yes Maybe No

23(88.9%) respondents stated that they would never engage with a company that has 1- or 2-
star ratings. Thus, it can be inferred that high ratings definitely is a parameter for better
products playing a significant role in attracting consumers. For example , if a small enterprise
falls victim to fake reviews, and the ratings of their products drop to 1 or 2 stars, their entire
business will take a huge hit before it grows. So, for any seller, it’s very important to have a
high review average to run their business sustainably. In addition, this, this data also reveals
another root cause of “Fake reviews” propaganda. As the consumer demand is highly elastic
with respect to the ratings of the product or service, the business owners/sellers’ resort to fake
reviews and maintain a high star rating to attract the maximum customers possible. As
organically converting a 1- or 2-star product to 5 stars will take a lot of efforts and extra cost,
fake reviews are an easy go-to method to increase the ratings instantly.

9. Have you ever fallen a victim to fake reviews ?

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 Yes
8%

No
92%

Yes No

Out of 36 responses, 33(91.7%) respondents stated that they have never been a victim of fake
reviews. Interestingly, only a small number of people have unfortunately been cheated and
deceived because of it. As the ratings given on online websites is a cumulative rating of
hundreds or thousands of reviews, customers usually can’t pinpoint at a review and judge if
they have been misled or not. As this is primary research there are several inferences that can
be derived from the data collected.

10. If yes, please share your experience.

Only 1 respondent answered : Apparently, he had been a victim of buying products especially
of apparel. . The fashion segment is one of the most targeted sections for fake reviews as the
customer doesn’t have the option of trying out the outfit. So, reviews are the only means by
which the consumer can judge the quality of clothing, the size fitting and durability of the
product. Any fake reviews in the segment are basically manipulating the customers and
getting the advantage of the lack of physical touch.

11. Do you know there is a mechanism available under Consumer protection Act that can
be sought against fake reviews ?

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 Yes
29%

No
71%

Yes No

Surprisingly , 24 respondents(70.6%) didn’t know about the redressal mechanism provided

under Consumer Protection Act that can be sought against Fake reviews. The rapid growth of
online shopping platforms has enabled every customer to make use of the digital platforms
efficiently. Along with this extremely efficient facility, it should be made mandatory to read
about the fake review laws. As none of the shopping platforms promote these laws,
consumers mostly remain unaware of their existence and can’t protect themselves for
potential frauds. Therefore, the consumer should be made aware of his rights so as to seek
help if some mishap occurs. Also, if the consumers are aware and start to report even 20% of
the fraudulent reviews, this entire bogus industry will cripple. As the demand of consumers to
watch the rating of the product to buy has given birth to this fraud review industry, only
consumers can put it to and end by taking more responsible actions against them. . Therefore,
consumers should be made aware of their rights so as to seek help if some mishap occurs.

32 | P a g e
 IMPACT

It is no brainer that fake online reviews in huge numbers, specifically positive ones, enhance
visibility of the sellers on Amazon's platforms - placing them higher up on search engine
results along with increasing sales. Since e-commerce platform algorithms heavily weight
product ratings when presenting products, all items with positive reviews are often shown at
the top.31 As a result, buyers are less likely to purchase items with poor ratings or those with
fewer ratings. However, like with other systems, vendors have discovered a technique to
deceive buyers and algorithms32. Hence, to draw clients, some players have resorted to
posting fake reviews of their goods. These items are ranked higher because algorithms are
subservient to data, drawing more attention and eventually buyers. Users are also more
willing to spend more money on a product with a larger percentage of favorable reviews than
they are on a product that is more affordable but has lower ratings. Due to the dynamics of
the market, established, businesses grow in size as a result of their increased visibility, while
small businesses find it difficult to compete. Customers frequently choose to purchase goods
with more favourable reviews. Therefore, the dishonest players may do far better than honest
ones.33

The effects of online reviews are so that one survey's findings revealed that 91% of people
aged 18 to 34 and 85% of consumers agree that online reviews are just as valuable as a
reliable personal recommendation.34 Imagine the cost of people affect by online reviews,
considering it to be a negative review leading to conversions.

31
Anon, 2022. E-commerce: How the 'fake review' economy works. Swarajyamag. Available at:
https://swarajyamag.com/business/e-commerce-how-the-fake-review-economy-works
[Accessed August 18, 2022].
32
Hollenbeck , B., He, S. & Proserpio, D., 2020. How fake customer reviews do - and don't - work. Harvard
Business Review. Available at: https://hbr.org/2020/11/how-fake-customer-reviews-do-and-dont-work
[Accessed August 18, 2022].
33
Anon, 2022. E-commerce: How the 'fake review' economy works. Swarajyamag. Available at:
https://swarajyamag.com/business/e-commerce-how-the-fake-review-economy-works
[Accessed August 18, 2022].
34
Diana Kaemingk // October 30, 2022. 20 online review stats to know in 2019. Qualtrics. Available at:
https://www.qualtrics.com/blog/online-review-stats / [Accessed August 18, 2022].
33 | P a g e
34 | P a g e
 Combating Fake
reviews

Numerous sites have created automatic techniques to recognize and delete reviews that are
blatantly fake in response to this problem. For instance, Yelp's proprietary technology
removes around 16% of its ratings.

In 2021, Amazon cracked down on 600 Chinese companies exploiting its platform and
abusing the review system. In addition, the business disclosed that it has cancelled around
3,000 merchant accounts that were supported by these businesses in order to combat
fraudulent reviews and other policy infractions. 35 Amazon combated the threat posed by false
reviews by investing more than $500 million and hiring 8,000 staff members in 2019 alone.
But the main issue was once a fake review had been posted, it typically required more than a
hundred days to remove it. That gives sellers more than enough time to reap benefits from the
temporary increase in sales while also giving enough customers a chance to be duped for a
significant increase in one-star reviews. 36

One of the solutions can be collaborating with social media sites like Facebook to better
understand how merchants are hiring fake reviewer which in turn would be advantageous to
embrace the platform's visibility and hasten the process of identifying and filtering out fake
reviews.37Likewise Amazon has previously requested assistance from other social media
businesses in combating fake reviews by keeping an eye out for social media groups that used
to use to perpetuate fake reviews.38

35
Anon, 2021. Amazon shuts 3,000 online stores over fake reviews: Report. Gadgets 360. Available at:
https://gadgets360.com/apps/news/amazon-china-shut-3000-online-store-merchant-account-600-brands-fake-
reviews-violation-cindy-tai-2546801 [Accessed August 18, 2022].
36
Hollenbeck , B., He, S. & Proserpio, D., 2020. How fake customer reviews do - and don't - work. Harvard
Business Review. Available at: https://hbr.org/2020/11/how-fake-customer-reviews-do-and-dont-work
[Accessed August 18, 2022].
37
Hollenbeck , B., He, S. & Proserpio, D., 2020. How fake customer reviews do - and don't - work. Harvard
Business Review. Available at: https://hbr.org/2020/11/how-fake-customer-reviews-do-and-dont-work
[Accessed August 18, 2022].
38
palmer, A., 2021. Amazon asks social media companies to help it root out fake reviews. CNBC. Available at:
https://www.cnbc.com/2021/06/16/amazon-asks-social-media-companies-to-help-it-root-out-fake-reviews.html
[Accessed August 18, 2022].

35 | P a g e
Google even put 100,000 companies under protection in 2021 due to suspected bogus ratings.
39
Long before in 2016, Zomato also came up with Project warp to weed out fake reviews. 40

Recently, The Federation of Hotel and Restaurant Associations of India came up with the
idea that sharing the name of reviewers with business owners must be part of the framework
recommended to weed out bogus reviews on e-commerce platforms. It also advocated for the
creation of a body to oversee the behaviour of internet portals, such as online food service
and travel aggregators that permit false, prejudiced, or unreliable reviews. 41

39
Anon, 2022. E-commerce: How the 'fake review' economy works. Swarajyamag. Available at:
https://swarajyamag.com/business/e-commerce-how-the-fake-review-economy-works
40
Joshi, A., 2016. Zomato launches 'Project warp' to tackle fake & biased reviews! Trak.in - Indian Business of
Tech, Mobile & Startups. Available at: https://trak.in/tags/business/2016/06/13/zomato-project-warp-fake-biased-
reviews/ [Accessed August 18, 2022].
41
Anon, 2022. Reviewers' identity should be shared with biz owners to curb fake reviews on e-commerce sites:
Fhrai- et retail. ETRetail.com. Available at: https://retail.economictimes.indiatimes.com/news/industry/reviewers-
identity-should-be-shared-with-biz-owners-to-curb-fake-reviews-on-e-commerce-sites-fhrai /93199077
[Accessed August 18, 2022].

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 POSSIBLE
SOLUTIONS

 ENHANCING LEGITIMACY
Asking people to attach photos or videos while giving reviews to enhance legitimacy
 FEEDBACK
Business can ask for feedback and reach out to customers who are dissatisfied with
their service.
 VERIFIED BUYER AND SELLER LABEL
Reviews posted by individuals who have really purchased the product they are
evaluating, as shown by their purchase history, should be given the "Verified Buyer"
label. The same should be done for the sellers so that they can’t sell faulty products in
the name of higher ratings.
 CONSUMER REDRESSAL FORUM
There should be an active redressal forum in every e-commerce site where people can
report if they are a victim to such wrongdoings.
 THE ESTABLISHMENT OF A CENTRAL AUTHORITY
There should be an establishment of central authority to govern such fake reviews and
also there should be an oversight mechanism to filter out such reviews
 USING AL TECHNOLOGY
The use of new upcoming Al technology should be inculcated to eliminate fake reviews.

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 CONCLUSION

We can successfully include that in today’s world where we rely on e-commerce sites to buy
mostly all products , reviews play a significant role. According to the analysis, the $4.28
trillion online retail industry is characterized by the significant economic impact of fraudulent
online reviews. This indicates that fake reviews have far-reaching consequences in terms of
social as well as economic costs. It is therefore one among the most expensive and one of the
biggest marketplaces for bad actors in nations where penetration of E-commerce is large and
continues to spread. Hence. Taking active steps to combating fake online reviews and further
reducing the influence of dishonest reviewers who undermine online purchasing decisions
has become a clear economic necessity. For E-Commerce platforms, companies, and
customers alike, fake reviews are one of the largest reputation destroyers and a major issue.
For a brand to be a success, trust of consumers plays an instrumental role. A survey by
Bazaarvoice showed that 26% of respondents admitted fake reviews would lead them to lose
trust in the E-Commerce brand. The rise in fake reviews affects everyone and not just
customers. It might be a major conundrum for companies that wish to involve consumer
analytics in order to get valuable market insights and consequently make informed business
decisions. Thus, removing it not only instill brand trust and assist in generating revenue , but
also helps brands to maintain trust among their existing and future customers. It will thus help
in creating and enabling a more positive, reliable experience for consumers.

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 REFRENCES

ONLINE WEBPAGES :

 World Bank
https://www.worldbank.org

 The Statesman
https://www.thestatesman.com

 Web Foundation
https://webfoundation.org

 India Brand Equity Foundation

https://www.ibef.org

 Euro News
https://www.euronews.com

 TaxGuru
https://taxguru.in

 Press Information Bureau

https://pib.gov.in/

 The Print
https://theprint.in

 Rocket Lawyer
https://www.rocketlawyer.com

 The Indian Express

https://indianexpress.com

 Data Hut
https://www.blog.datahut.co

 The world Economic Forum

https://www.weforum.org

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  New York Magazine
https://nymag.com

 The Business Standard

https://www.business-standard.com/

 Mid-Day
https://www.mid-day.com

 News18
https://www.news18.com

 Statista
https://www.statista.com

 J. Fitzgerald Group
https://jfitzgeraldgroup.com

 LinkedIn
https://www.linkedin.com

 f.hubspotusercontent
https://f.hubspotusercontent00.net/

 Harvard Business Review

https://hbr.org/2020

 Qualtrics XM
https://www.qualtrics.com

 Swarajya
https://swarajyamag.com

 Gadgets 360
https://gadgets360.com

 CNBC
https://www.cnbc.com

 Trak.in
https://trak.in

 ET Retail
https://retail.economictimes.indiatimes.com

STATUTES :

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 The Consumer Protection Act 2019

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