Online marketplaces have become shopping go-tos. No matter what you need or want, you'll probably find it on general marketplaces like Amazon or Ebay. Want fashion or accessories that are a bit more upscale? Head to Poshmark. Talent recruitment marketplaces like Indeed, home repair sites like Angi and even sites for reviews and recommendations such as Yelp all profit by functioning as conduits of supply and demand. According to G2, they make money in one of three ways:
The integrity of content and information—either on or delivered by—a marketplace is critical to maintaining consumer trust and loyalty, and therefore, its revenue. When content is created or manipulated fraudulently, the results affect consumers and suppliers alike.
One way that deceptive or fraudulent activity shows up in online marketplaces is in the form of bad data. As an example, a person might be looking for information on roofing services. They complete a form with their contact information and the type of service they need, such as a repair or a re-roof. The information is instantly sent to multiple roofing contractors—each of whom pays up to several hundred dollars for the lead. The contractor will usually try to contact the lead immediately. If the phone number is not legitimate, or if the person claims to not have submitted a request, the lead is worthless, yet the contractor must pay for it.
If the lead generation site doesn't verify identities and data submitted by consumers, bad data wastes valuable time for suppliers who must take time away from jobs in progress to call the leads. Bad data also costs money—up to thousands of dollars per month in useless leads. Contesting the lead with the marketplace often takes additional hours of time with no guarantee of resolution. This creates a poor experience with the marketplace, jeopardizing its primary customer base—suppliers.
The other saboteur of trust in marketplaces is fake reviews. These are any positive, neutral or negative reviews that are not an actual consumer's honest, impartial opinion and do not reflect a genuine experience of a product or service. According to data security provider Cheq, reviews—real and fake—influenced $791 billion of U.S. ecommerce spend in 2021, with 89% of consumers relying on reviews for purchase decisions.
It's extremely difficult to discern whether any given review is legitimate or not. Even though they lean heavily on reviews, consumers don't trust them. According to Sift, 85% of consumers believe the reviews they read are sometimes or often fraudulent. Fake reviews surged during the pandemic. During the 2020 holiday shopping season, about 42% of the reviews on Amazon were fakes, according to one estimate.
Why so many fake reviews? Return on investment. Fake reviews are profitable, either helping organizations boost ratings or trash competitors. Davide Proserpio, marketing professor at the University of Southern California Marshall School of Business, says, "Most fake reviews are at extremes. Brands will pay for five-star ratings for themselves, or one-star ratings to trash their competitors." According to a UK reputation manager, just four negative reviews can cost a company 70%1 of its potential customers.
Fake reviews deliver results quickly. According to digital location marketing service Uberall, a brick-and-mortar business that increases online star ratings by 0.1% improves conversion rates by 25%2. The Federal Trade Commission has shown that paid-for fake reviews deliver a 20X payoff. In an enforcement case against Legacy Learning Systems Inc., a $250,000 outlay on fake reviews generated more than $5 million in sales.
Reviews account for 15.44% of SEO ranking credit. Search engines consider review quantity, diversity, velocity and quality. Fresh fake reviews significantly increase organic search position and sales rankings for up to four weeks—even after they are detected or deleted. Finally, bad actors using fake reviews can gain a positive (although just as fake) reputation faster than by using traditional methods.
Fake reviews are so profitable that the "industry" has gone into overdrive. Cheq reports that the practice of buying and selling fake online reviews has become standardized with formal groups, commission structures—even loyalty schemes. Payments will change hands for anywhere from 25 cents to $100 per review. Marketplaces, including private groups on Facebook, solicit buyers to purchase products and leave five-star reviews in exchange for a full refund, and in some cases a $5-$10 commission.
SafetyDetectives, a company that conducts antivirus reviews, uncovered a database leak that exposed more than 200,000 people in a scam3 that involved Amazon vendors exchanging free products for fake reviews. Reviewers received lists of products. They would buy the product and post a review—following specific criteria to avoid Amazon fraud detection. Once a review was verified by the seller, who was sent a link to the reviewer’s Amazon profile, the reviewer was reimbursed through PayPal, not through the Amazon platform.
Other investigations have uncovered bulk packages of 1,000 reviews selling for $11,000 with "review rings" also enrolling in loyalty schemes to ramp up output. In other cases, fake reviews are being weaponized. Like ransomware, cybercriminals threaten ecommerce sites that online ratings will drop to one star if payment demands aren't met. Other bot-driven fake review schemes are also common on the dark web.
In any marketplace, it's always "buyer beware." However, in digital commerce, there are ways for marketplaces to improve the integrity of their platforms and the trustworthiness of both their consumer and supplier bases. It begins with trusted identities, because a trusted identity will share legitimate data and interact authentically. Whereas non-trusted identities and fake profiles are potentially looking to make a fast buck off posting phony opinions.
Marketplaces that can verify identities of all users—at any point along their journey, across all points and over time—can begin to build a trusted foundation for commerce and lead generation. Customers and suppliers benefit from safe, frictionless online experiences, which in turn helps build sales and attract new users. Trusted identities enable marketplaces to keep their door open for business while greatly reducing risk and exposure to bogus reviews, scammers and fraud.
Want to know more? Download The Trust Paradigm for Online Business white paper or learn how to accelerate trust and reduce consumer friction with Pipl Trust, here.
Sources:
1. “Negative and fake reviews – their impact on your company’s reputation,” Reputations.org.uk, 2019