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Like much of the Internet, online reviews are often fake. No matter the platform—Amazon, TripAdvisor, Yelp, or another—no matter the subject, where user reviews are public, fakery usually follows.

The practice has surged in popularity in recent years as retailers scramble to capitalize on consumers love of ecommerce. Saoud Khalifah, CEO of the fraudulent-review tracking company FakeSpot, says the number of companies padding their online ratings using reviews generated by bots, ghostwriters, or other schemes has increased dramatically over the past four years.

“When I started [looking into] this in 2015, it wasnt as big as it is today,” said Khalifah. “Today, it has reached epidemic proportions—whether youre looking at Sephora, Walmart, Amazon—its like a plague right now.”

Commissioners Rohit Chopra and Rebecca Slaughter of the Federal Trade Commission say its about to get a lot worse, and they know who to blame: their own agency. The FTC this week brought its first case against a company for enlisting its employees in a coordinated fake-review campaign to boost sales. Chopra and Slaughter say the decision reached by their fellow commissioners could usher in even more review fraud. The settlement did not require the company to admit fault, notify customers of the fraud, or turn over any ill-gotten gains.

“Dishonest firms may come to conclude that posting fake reviews is a viable strategy, given the proposed outcome here,” Chopra said in a statement dissenting from the FTCs decision, joined by Slaughter. “Honest firms, who are the biggest victims of this fraud, may be wondering if they are losing out by following the law. Consumers may come to lack confidence that reviews are truthful.”

A fraught fraud case

The case in question concerns skin-care brand Sunday Riley, which on Monday agreed to settle FTC charges that it posted faked reviews for its products on Sephoras website for nearly two years. The FTC has the power to punish companies for engaging in online review fraud through fines, forfeitures, or notices, among other things. But the Sunday Riley decision amounted to little more than finger wagging, Chopra and Slaughter say.

The dissenting commissioners say the agencys investigation uncovered more than enough evidence to prove that Sunday Riley had engaged in online review fraud—including an Instagram comment posted by a brand representative that confirmed the company had posted fake reviews. But the FTC voted 3–2 to allow Sunday Riley to settle the charges by agreeing not to post future fake reviews, without admitting fault.

Chopra and Slaughter say the settlement will ultimately do more harm than good and that it tells companies theres little risk in engaging in online review fraud; even if regulators find the fake reviews, the company wont face a meaningful punishment, the dissenters say. Other agency staffers said they feared the decision could harm competition online, as the FTCs reluctance to crack down on fake reviews in such a high-profile case may also influence decisions by state and local courts.

It is extraordinarily rare for the FTC to get a fake-review case as straightforward, prosecutable, and evidence-rich as Sunday Riley, FTC staffers say. Normally, its difficult for regulators to identify when companies engage in fake review sRead More – Source


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