Amazon, Fraud, and Information Cascades
On October 3, 2016, Amazon officially changed its Community Guidelines to ban users from posting reviews on products they received for a free, or discounted, price. This ban targeted “solicited” reviews from websites such as Amazon Review Trader [now renamed the “ART Deals Community”], SnagShout, Elite Deal Club, Dollar Deal Reviews, and many more. Any user caught writing a solicited review now faces threat of having their account suspended or, worse, lawsuit. This is not the first time Amazon has pursued sellers of fraudulent reviews, Amazon sued a collection of people from the service-selling website Fiverr who were offering fake reviews for $5.
So, the big question is, what incentive do these sellers have for offering their products discounted in exchange for product reviews? Search Engine Land found that 88% of consumers trust online reviews as much as personal recommendations, 72% of consumers say that positive reviews make them trust a local business more, and 85% of consumers said they read up to 10 reviews. This data shows that not only are online reviews influential on individual consumer decisions in purchasing a product, users trust products with more online positive reviews than products with fewer positive reviews. Furthermore, when searching a product on Amazon, the search results are based on user traffic patterns, average customer review rating, the number of customer reviews, customer satisfaction & retention, etc. Thus, in the age of online shopping, new start-up and lesser known brands must almost wholly rely on customer reviews and satisfaction when it comes to becoming successful in the market.
Only around 10% of customers leave feedback for any given Amazon product. Given this low rate, it’s difficult for new products to get off the ground when competing with thousands of other similar products. In and of itself, the idea of incentivising consumers to leave reviews by offering products at a discount doesn’t seem inherently malicious. However, the websites which offer these products at a discount in exchange for a review emphasize to sellers each consumer’s past review history, pushing sellers to give these products to consumers who have a history of leaving good reviews. Knowing this, potential consumers will skew their ratings and opinions on products towards the positive side and rarely leave negative feedback in order to receive more discounted products in the future. Thus, the majority of companies who participate in these review exchange systems have the benefit of receiving a plethora of positive reviews and future potential buyers (who will pay full price for the product) by only having to target consumers who are guaranteed to leave a positive review. This “fraudulent” method of viral marketing utilizes the power of network cascades to break into dense clusters and initiate an information cascade based on untrustworthy information.
So, here the true influence of fraudulent reviews becomes evident, a company needs only a few fake reviews to start an information cascade and ensure a steady influx of future potential buyers, enlarging its potential buyer network. These new buyers, of course, may have differing, possibly negative, opinions on a particular product, but the vendor can simply purchase more fake reviews to again skew their product’s average rating, burying the few truthful reviews and turning them into the “exception but not the rule.”
References:
https://www.amazon.com/p/feature/abpto3jt7fhb5oc
http://fortune.com/2015/10/19/amazon-fake-reviews/
88% Of Consumers Trust Online Reviews As Much As Personal Recommendations
http://startupbros.com/rank-amazon/