FTC Takes a Whack at Fake Amazon Reviews

Going after fake reviews is like playing whack-a-mole, except it costs money to swing the hammer, and the moles get rich if they don't get bopped on the head. But that didn't stop the Federal Trade Commission (FTC) from taking action against a dietary supplement company that purchased fake Amazon reviews.

The gist of the story is that Cure Encapsulations lied about what its diet pills could do--which you probably guessed when we described it as a "dietary supplement company" above--and then paid another company to make sure its Amazon review score average didn't fall below 4.3 stars. Now it's been fined $12.8 million.

That might seem like a win for Amazon and other companies that allow customers to review products. These platforms must maintain a certain level of trustworthiness if they're going to be taken seriously. Otherwise, people won't be able to make impulse purchases without abdicating responsibility for their choices.

The FTC's statement supports the idea that this is a landmark moment for fake reviews. “People rely on reviews when they’re shopping online,” FTC Bureau of Consumer Protection director Andrew Smith said. “When a company buys fake reviews to inflate its Amazon ratings, it hurts both shoppers and companies that play by the rules.” Even if that is true, does it really matter?

The reality is that Cure Encapsulations' fine likely had far more to do with the misleading claims about its product than the fake Amazon reviews. Sure, it's being forced to identify the fake reviews, so Amazon can remove them from its site. Yes, the prospect of a $12.8 million fine is scary, at least for most people.

But the FTC's decision was against Cure Encapsulations, not the company that provided the fake reviews, which means it's not actually solving the main problem. It whacked a mole, but it didn't find a way to end the game. More unscrupulous companies are going to pay to manipulate reviews on platforms like Amazon's.

It's already hard to trust many reviews, especially when it comes to tech products. Companies often give people free hardware--to keep, not just to review--in exchange for favorable reviews. These relationships are supposed to be disclosed in the reviews, but we suspect that hasn't stopped many people from being dishonest.

There also isn't a great way to verify reviews. Consider the news that Facebook employees rated the company's Portal product, which they worked on, with five stars on Amazon without disclosing their employer. They were caught, but how many other people haven't been? (Especially if their reviews aren't the only positive ones in a sea of mediocre or negative judgments.)

Unless more action is taken against the companies that offer fake reviews, there's no sign the FTC is making them a real priority. And, even if it does, there's always going to be a mole willing to risk getting smacked by the hammer of justice if they might get rich. How long will it be until regulators' arms get tired?