- This is an excerpt from a story delivered exclusively to Business Insider Intelligence E-Commerce Briefing subscribers.
- To receive the full story plus other insights each morning, click here.
Amazon has a problem with false product reviews, according to a report by UK consumer group Which? cited by Business Insider. Which? looked at hundreds of popular tech products and found that, among headphones alone, 71% had five-star ratings.
Business Insider Intelligence
However, all the headphones found on the first page of results were from "unknown" brands and around 87% of the 12,000 reviews for these products were unverified. When Which? shared its research with Amazon review checking site ReviewMeta, the latter said it believed all of the five-star reviews of the top 10 pairs of headphones were fake.
Here’s what it means: Fake reviews hurt customer confidence and can be bad for other sellers on Amazon’s marketplace.
Customers rely on reviews for information, and if they have to worry about fake reviews on a platform, they may limit their spending behavior. A resounding 97% of US consumers look at reviews when making their purchasing decisions, with 26% doing so for every purchase and 95% reading more than one review.
If Amazon customers have to worry about whether a major information source they use is reliable, they may lose confidence in buying on Amazon or only buy products from brands they trust. This would shrink purchase volume for Amazon and could especially harm its small sellers, which might suffer because consumers don’t recognize them and have less trust in reviews praising them.
The bigger picture: Both Amazon and the FTC have been cracking down on false reviews, but the new report shows that there’s still work to do.
- Amazon has deleted thousands of reviews to minimize fakes. As part of an aggressive strategy to combat seller scams, Amazon scrubbed a large volume of reviews from its site during the holiday season, with some products losing thousands of reviews in a day. Campaigning against fake reviews like this may be a good way to quickly address its current fake review issue, but the tactic has a drawback: Sellers and a person familiar with the matter said some real reviews were inadvertently erased in the 2018 deletions.
- The FTC recently challenged a company using paid fake reviews on Amazon. In the first case of its kind, the FTC targeted Cure Encapsulations, Inc. — which sells a weight-loss supplement that’s incorrectly associated with weight loss and poses medical risks — in February for paying Amazonverifiedreviews.com to post fake five-star reviews to keep its product at a 4.3-star average rating. A settlement was eventually reached that requires Cure Encapsulations to only make claims with evidence, tell Amazon which reviews it bought, and pay a $12.8 million settlement that may be waived if the company makes other, smaller payments. If the FTC continues crackdowns on fake reviews at a federal level, it could help Amazon with its current problem by taking the job of eliminating false reviews out of the e-tailer’s hands.
Interested in getting the full story? Here are two ways to get access:
1. Sign up for the E-Commerce Briefing to get it delivered to your inbox 6x a week. >> Get Started
2. Subscribe to a Premium pass to Business Insider Intelligence and gain immediate access to the E-Commerce Briefing, plus more than 250 other expertly researched reports. As an added bonus, you’ll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. >> Learn More Now
- Amazon now lets Prime customers schedule orders for the delivery day of their choice — and it’s a total game changer
- New in-store technologies could bring about stricter regulations
- Meet the 45-year-old executive helping Kroger take on Amazon, Walmart, and Aldi