Unreliable Online Reviews: Who is the Watchdog?

Unreliable Online Reviews: Who is the Watchdog?

Online reviews have become important tools for consumers, businesses and the marketplace.  Recent surveys show that more than two-thirds of consumers use online reviews to make purchasing decisions, and 88% give the same weight to online reviews as a personal recommendation.  Negative online reviews can cost businesses their reputation, sales, and competitiveness. The response to reviews can weed out bad actors and reward quality in the marketplace. It is in the interests of all stakeholders that online reviews are authentic, honest, and representative of the true customer experience.  But, what if the integrity of consumer reviews is compromised?   Who is going to prevent or mitigate the harm?

Last week, Amazon.com filed a lawsuit to combat the practice of posting fake online reviews of the products sold on its site.  Amazon claims that these “false, misleading and inauthentic” reviews on its website are damaging its brand.  A previous lawsuit, filed by Amazon in April, targeted the practice of hiring paid reviewers to post comments.  Amazon made claims of trademark infringement, false advertising, and violations of consumer protection laws.

False reviews of any ilk are problematic and may unfairly skew the marketplace, but consumers are pretty savvy and can often smell a rat.  More insidious are efforts to silence consumers who may have a beef.  No business wants to be publicly scolded, but most understand that honest criticism offers an opportunity to make corrections and improve.  As Bill Gates says, “Your most unhappy customers are your greatest source of learning.”

However, not all businesses are healthy enough to embrace criticism.   To avoid bad publicity, some companies actually penalize customers who post negative reviews.  In a Utah case, a company demanded that a legitimately unsatisfied customer remove a negative online review or pay $3,500 in damages based on their website’s terms of service, which included a non-disparagement clause. While the court ultimately ruled in favor of the consumer, the questionable business practice earned the attention of lawmakers who want to avoid similar scenarios.

In a somewhat rare bicameral, bipartisan effort, legislation has been introduced to ban businesses from punishing customers for posting negative reviews.  The Consumer Review Freedom Act (S. 2044/H.R. 2110) would prohibit provisions in form contracts that forbid consumer reviews and penalize customers for engaging in such communications.  (Businesses would still be able to sue for dishonest statements and misrepresentations.)  The Senate sponsor of the bill, Senator John Thune (R-ND), chairs the Commerce, Science and Transportation Committee that has jurisdiction over the matter.  The bill’s supporters are optimistic about moving the legislation this year, and Senator Thune is well positioned to do so.

Vigilance on the part of the private sector with the help of the courts and policy makers may preserve online reviews as meaningful tools that support good business practices.