The Union government has recently declared that it plans to develop a framework to combat fake product reviews on e-commerce sites after studying “best practices available worldwide”. This was announced after a meeting of representatives from the Department of Consumer Affairs, e-commerce companies and consumer rights groups on May 29.
In a statement released after the meeting, the Department of Consumer Affairs (DoCA) flagged paid and unverified reviews as a challenge and stressed the need for a framework.
What are fake reviews and how are countries around the world dealing with this issue?
Why are fake reviews a big problem?
Fake reviews were defined in a 2015 document by the European Parliament, the EU’s highest legislative body, as follows: “Any review that is not the honest and unbiased opinion of a real consumer, or that does not reflect a consumer’s authentic experience of a product, service or company.
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The DoCA also cited a statement from the European Commission dated January 20, 2022, which stated that more than half of the 223 websites controlled by them (the Commission) did not follow guidelines on presenting truthful information to consumers.
Speaking of the Indian scenario, the statement added, “Since e-commerce involves a virtual shopping experience without any opportunity to physically view or examine the product, consumers rely heavily on reviews posted on platforms. of e-commerce to see the opinion and experience of users who have already purchased the good or service. As a result, due to false and misleading reviews, the right to be informed, which is a consumer right under the Consumer Protection Act 2019, is violated.
In India, fake reviews pose a threat to consumer rights under the Consumer Protection Act 2019. The law states that consumers have the right to be “informed of the quality, quantity, potency, purity, standard and price of goods, products or services”.
How much do people trust online reviews?
EU documents mention that around 70-80% of respondents in several surveys said that online reviews play a role in their buying decision.
With the growth of the e-commerce industry, the need for transparency has increased. In a 2018 report by Kearney, a global management consulting firm, it was estimated that by 2030, the e-commerce sector in India will be valued at $40 billion or more than Rs 3 lakh crore.
In June 2020, e-commerce company Myntra saw over 7,000 new customers in its “end of reason sale”, a reflection of the growth experienced by the industry.
Rohit Kumar Singh, Secretary, DoCA, said that in India, ensuring the authenticity of the reviewer and the associated accountability of the platform are the two key issues in the fight against fake reviews.
E-commerce players must disclose how they choose the “most relevant reviews” to display on their websites, he added.
Are there different sources of fake reviews?
In the 2015 report, different types of fake review sources were identified. One source is that consumers rate a product negatively because they may have unrealistic expectations. Another is service operators, such as hotels or shops, seeking to counter negative reviews.
The last two types are more organized fake reviews – those written in exchange for incentives provided by companies such as discounts, vouchers, etc., and others from operators who help companies manage their reputation by line.
As the 2015 European Parliament report indicates, fake reviews are difficult to detect and it is difficult to prove that a reviewer has been paid to provide a fake review.
In a 2020 study, the Harvard Business Review said a large and thriving market for fake reviews has been uncovered in private Facebook groups in the United States.
“Sellers would use these groups to recruit people to buy their products and leave a genuine five-star review, then compensate them…for the cost of the product, taxes and fees, and in some cases, a $5-10 commission” , reads an excerpt from the study.
He added, “The increase in reviews translated into a significant increase in sales, with these products seeing an average increase of 12.5% in their sales ranks.”
What can be done to combat this?
Besides India talking about a framework to address the issue, the UK recently said it would ban fake reviews. The European Union covers fake reviews under its Unfair Commercial Practices Directive. Clarifying the directive, he said: “For ease of enforcement, it is explicitly provided that the sale, purchase and submission of false consumer reviews in order to promote products is prohibited. In addition, there is now a clear obligation to inform consumers about the treatment of reviews.
E-commerce sites have also tried to correct this problem which harms their credibility.
Amazon says it uses “machine learning tools and human investigators” to weed out fake reviews. Similarly, Tripadvisor says it removed more than 2 million posts from its website in 2019, or about 8% of the total that year. This was done using “fraud detection technology” employed by banks, he said.