Enforcers are failing consumers on fake reviews
Euroconsumers’ member investigations have found a steady stream of fake reviews on e-commerce sites. The New Deal for Consumers’ Omnibus Directive should boost the fight against fake reviews, but the question burning on our lips is “where is the enforcement?”
In May 2022, as a part of the New Deal for Consumers, key parts of EU consumer law were updated to bring it up to speed with rapidly changing digital consumer markets. As well as modernizing laws to better fit consumers’ experiences online, the Omnibus Directive was intended to improve enforcement.
In this blog we look specifically one of the many areas covered in the Omnibus Directive – the challenge of combating fake reviews – and the poor record on enforcement to date.
Fake reviews: why spotting bogus reviews matters
With so many consumers buying goods and services online, reviews have become integral to the shopping experience and consumer choices. Reviews can give detailed information on users’ experiences and ratings can push popular products to the top of the charts.
Independent, verified and informative reviews have long been a welcome innovation in digital markets. But bulk quantities of fake or misleading reviews can skew results and make comparison difficult.
Academic research from 2022 found that fake reviews make consumers more likely to choose lower quality products, with a calculated loss from each review at approximately $0.12 for every dollar spent (roughly equivalent to 0.11 cents in every euro spent).
A 2021 sweep of consumer reviews on major websites carried out by the EU cast doubt on the reliability of 65% of the reviews
The sweep found websites that didn’t specify how reviews were collected and or mention that review writers were incentivised by the company.
Fixing the fake review problem
The changes in the Omnibus Directive were designed to help fix the fake review problem. An annex to the directive blacklisted several problematic practices like:
- sourcing false consumer reviews or endorsements
- misrepresenting consumer reviews with the aim of promoting products
- stating a product review is from an actual purchaser without properly checking
These changes were much needed, a recent analysis from Euroconsumers’ Spanish member OCU analysed almost 6.5 million reviews of around 50,000 products on Amazon in Italy and Spain, and hotel services on TripAdvisor and Booking.com. They discovered 8.5% of reviews on Amazon, 6% of reviews on TripAdvisor and 2% on Booking.com were fake.
However, when they took their results to the Spanish consumer protection authority, no action was taken.
Italy follows the fake review trail
In 2022, our Italian colleagues at Altroconsumo followed the trail further. Their investigation into the world of fake reviews uncovered a thriving underground business of fakes for sale.
They found websites and messaging sites acting as an intermediary for retailers who want the easy route to 5-star ratings and people who are willing to provide ratings in exchange for free products.
Under this system, the fake-reviewer purchases various products from a number of retailers on a platform, and after publishing their 5-star review, the retailer then credits the refund via PayPal.
Altroconsumo documented an organized system that is more extensive than one might imagine, easily identifying the involvement of nine websites, eight Telegram channels, and seven Facebook groups.
They then filed criminal proceedings in Bologna, Milan and Rome. In two of the three cases, the prosecutor decided to dismiss the case. Altroconsumo also sent their full report to the national consumer protection and competition agency, the AGCM to expose the unfair commercial practices. AGCM have yet to respond.
Enforcement reluctance will threaten trust in e-commerce
The cases in Spain and Italy show that enforcers who were aware of problems with fake reviews were not actively addressing them even before the Omnibus Directive was in place. A year on, there’s still no sign of change, despite it providing a great opportunity to step up and act on infringements.
Challenges for consumers in digital markets cannot only be solved by legislative changes but which must be addressed by full and prompt enforcement.
Euroconsumers knows strong consumers are an integral part of the digital economy. With real rights and access to information, they can drive markets to improve not just for themselves but for other buyers. However, they can’t do it alone.
Letting fake reviews fill up platforms and online sites risks pushing poor quality products into people’s baskets. Fake reviews devalue the time and effort genuine buyers have taken to review and rate products for their fellow consumers. Ultimately, if enough people stop trusting reviews, consumers and businesses lose a valuable tool.
If enforcers won’t take action on infringements, companies will carry on and consumers will miss out.
Stronger provisions in the Omnibus Directive might help, but it is the willingness of enforcement agencies to act on widespread wrongdoing that is so vital in digital markets.