Laws & Legislation

 

10 21 2013

10 21 2013

Fake Yelp Reviews Could Cost Small Business Owners

New York Attorney General Eric T. Schneiderman announced on Sept. 23 that 19 companies are being forced to pay more than $350,000 in penalties for writing fake positive reviews on websites.

The fines resulted from a year-long undercover investigation, known as “Operation Clean Turf”. The Attorney General office, posing as a Yogurt shop in Brooklyn, contacted firms who offer online marketing help. Some companies offered to write fake reviews on websites such as Yelp.com, Google Local, and Citysearch.com as a way of boosting their client’s notoriety. The companies, experienced in tricking consumer-review website filters, used IP spoofing and other tactics to appear legitimate, according to Schneiderman’s report.

The Attorney General office found that review writing services were openly promoted and sought after on Craigslist. One spa asked for an “expert” who can work around Yelp’s filtering system and offered $10 per review.

Schneiderman’s office took legal action against both the marketing firms and the companies who hired them. The companies agreed to stop the practice and pay penalties ranging from $2,500 to just under $100,000. The legal bearing held against the companies was false advertising. As Schneiderman’s website reads, “the practice of preparing or disseminating a false or deceptive review that a reasonable consumer would believe to be a neutral, third-party review is a form of false advertising,” and is illegal in the state of New York.

About Astroturfing

False advertising by posing as a neutral consumer is a practice known as “Astroturfing.” The term derives from the political world in the 1980s as the antonym of “grassroots.”

In the 1980s, advocates of political issues would distribute pre-written letters for voters to sign and mail to their congressmen. Former Sen. Lloyd Bensten (D-Tex.), who received a large number of such letters, commented on their lack of authenticity. “A fellow from Texas can tell the difference between grass roots and Astro Turf,” he said to the Washington Post in 1985. “This is generated mail.” The event was detailed in Rosemarie Ostler’s book “Slinging Mud”.

Astro Turf, a brand of synthetic carpeting that appears to resemble grass, is contrasted from grassroots, which, in the political world, refers to genuine citizen participation. The term is now applied to the marketing world as well.

Amidst concern that some paid advertisers were posing as third-party users to make their reviews appear genuine, the Federal Trade Commission started an investigation in 2006. Three years later, the agency’s rules were amended, requiring that “consumer generated media” outlets – blogs, reviewers – must disclose if they are being compensated by the company they are reviewing. Fines up to $11,000 could be imposed for each violation.

The FTC immediately took action against some companies but emphasized that fines would be a last resort.

Today, however, fines may become more common. With businesses increasingly relying on positive online reviews to promote themselves, more states could begin cracking down on the phony ones.

If your small business is in need of more online credibility, it’s better to play it safe with a legitimate promotional campaign. Consider getting a small business loan from National Funding to help finance the advertising you need to stay competitive.

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