E-Commerce's Fake Review Problem: What Indian Govt Can Learn From Global Regulations

Are you buying products online based on positive reviews by other customers? You might want to reconsider your decision as most of them may be fake or manipulated.

The issue of fake reviews on several e-commerce sites is not new and these platforms have often claimed to have addressed it.

Several sellers on these e-commerce platforms resort to unfair means to make their products stand. The algorithm on e-commerce platforms pushes products with more positive reviews to the top, which gives them an advantage over other products.

The reviews on these platforms matter as consumers usually buy products based on what other people write about their experiences.

A 2013 European Consumer Centres' Network web survey showed that 82% of respondents read consumer reviews before shopping.

To deal with this issue, some guidelines have already been adopted by consumer enforcement bodies, regulators, and other stakeholders, in the EU and internationally.

In India, the government has now stepped in to protect consumer interests.

On Saturday, the government said it is looking to develop a framework to keep a check on fake reviews posted on e-commerce websites to protect consumer interest.

The consumer affairs ministry along with the Advertising Standards Council of India (ASCI) held a meeting with stakeholders, including e-commerce entities, to discuss how paid, unverifiable reviews make it challenging for consumers to recognise genuine reviews.

The Department of Consumer Affairs (DoCA) will develop these frameworks after studying the present mechanism being followed by the e-commerce entities in India and the best practices available globally.

The e-commerce companies, however, have claimed they have frameworks in place by which they monitor fake reviews and would be pleased to take part in developing a legal framework on the issue.

What are fake reviews?

For any company that exists in the digital space, online reviews are critically important when it comes to winning business and maintaining a positive reputation.

Fake reviews are basically posted on e-commerce websites by either those are are paid to do so or in some cases, the users are not genuine.

Reviews are key to the decision-making process, helping customers to get a better idea about the product, including material, size, and shape. For example, a product may look too small to meet consumer needs in a picture, but customer reviews that address size more accurately can put a wary shopper at ease.

Fake online reviews influence $791 billion of e-commerce spending annually in the US, $6.4 billion in Japan, $5 billion in the UK, $2.3 billion in Canada and $900 million in Australia, according to a study.

Since reviews translates to business, that’s why there’s so much review manipulation happening, despite some improvement in review policing by the major platforms.

According to different estimates, fake reviews represent between 1% and 16% of all
consumer reviews. A 2015 study of fraud committed on the Yelp review site identified up to 16% of all its reviews as potentially fake.

According to estimates of the French Directorate-General for Competition, Consumer Affairs and Repression of Fraud, false online reviews across all sectors in 2013 may have represented up to 45% of all online reviews.

Steps taken around the world to curb fake reviews

In 2018, Australia’s competition watchdog took action against businesses including for engaging in misleading conduct relating to customer reviews. While 9 in 10 shoppers rely on consumer reviews when buying goods online, approximately 4% of all reviews posted are fake, the report warned.

Fake reviews are influencing consumer behavior, and are estimated to fuel $1.2 billion worth of e-commerce sales in Australia in 2021.

Online reviews may have influenced $3.8 trillion of global e-commerce spend in 2021, according to the study.

The Spanish law to protect consumer rights and regulate competition has now been modified so that businesses have to indicate whether, if somebody leaves a review of their product or service, they have actually bought or used it.

In 2013, the French Association for Standardisation (AFNOR) published an opt-in standard for the management of online consumer reviews. Under the Code, misuse of the AFNOR standard is a fraudulent commercial practice punishable by a fine of up to
€37 500 for natural persons and up to €187 500 for legal entities.

In 2015, the Danish Consumer Ombudsman also issued guidelines on the publication of online user reviews. Similarly, in 2013, the Australian Competition and Consumer Commission issued a guide for businesses and review platforms on online reviews.

The European Commission reported on 20 January 2022 that, in 144 out of the 223 websites checked, authorities could not confirm that these traders were doing enough to ensure that reviews were authentic, i.e., whether the reviews were actually posted by consumers that had used the product or service that the consumers reviewed.

Consumer protection authorities concluded that at least 55% of the checked websites potentially violate the EU’s Unfair Commercial Practices Directive (Directive 2005/29/EC) which requires that truthful information is presented to consumers to allow an informed choice. Authorities also had doubts for a remaining 18%.

What major e-commerce players do to protect customers

Amazon and Flipkart have deployed measures to tackle fake reviews on their platforms. However, due to the sheer size of the user base, it’s difficult to weed out all the negative elements on the platform.

Amazon has adopted an AI machine learning system that they built in-house to boost the weight of verified and newer customer purchase reviews and reviews that are deemed helpful by other users.

This is just one way Artificial Intelligence can detect and weed out fake reviews in online retail.

Amazon has cracked down on the practice, kicking companies off its marketplace when it finds out the seller has broken the rules.

Amazon also says it puts resources into removing fake reviews and the accounts that post them, adding that it blocked 200 million suspected fake reviews before they were posted in 2020.

In 2020, Britain's competition watchdog said Facebook and eBay pledged to crack down on the trade in fake reviews.

Facebook removed 188 pages and groups and disabled 24 accounts that were involved in the fake review trade, some on its Instagram platform.

The company said that people can report this type of group and that it removes groups and content if they're found to be in violation of the rules. Amazon also monitors social networks for groups coordinating the reviews and last year reported 6,000 of the groups to social media companies.