It seemed all right in the old days for Packard advertisements promoting the luxury automobile to say, “Ask the man who drives one.” But in this new era of online shopping, consumers will do well to suspect that product advice is bought and paid for.
A scandalous example involving Amazon and Belkin International, a producer of consumer electronics items, surfaced earlier this year. A Belkin official was caught soliciting favorable reviews of Belkin products on Amazon for 65 cents each. Instructions were to write 25 to 50 words “as if you own the product and are using it” and “always give a 100 percent rating.” Also: “Mark any other negative reviews as ‘not helpful’ once you post yours.”
Belkin expressed “great surprise and dismay” that one of its employees could have done such a thing and removed all associated postings from Amazon’s system. It regretted that such unethical practices undermined consumers’ trust in online user reviews from fellow users.
In another case, Lifestyle Lift, a cosmetic surgery company, agreed in July to pay $300,000 in penalties and costs to New York state in a settlement of prosecution for publishing phony positive reviews of the company’s franchised clinics. Attorney General Andrew Cuomo called the case a strike against the growing practice of “astroturfing,” in which employees pose as independent consumers to post positive reviews and commentary to Web sites and Internet message boards about their own company.
Many fellow users of a product give honest appraisals when they write reviews. But it is no wonder that some of the online advice is fake. A lot of money is at stake, since spending for online advertising totals $1.5 billion this year and will reach $3 billion by 2013, according to PQ Media, a research firm. And a recent poll by Consumer Reports found that nearly 80 percent of online shoppers check user reviews before buying.
Much word-of-mouth online buying advice comes from bloggers, who often get freebies or cash pay for what amounts to product reviews. Yelp.com and Izea.com are leaders in a new industry of encouraging blogger advice. Izea calls itself the world leader in “sponsored conversations,” which it describes as “a social media marketing technique in which brands provide financial or material compensation to bloggers in exchange for posting social media content about a product, service or website on their blog.” It says it has initiated nearly 1 million of these paid reviews.
The Federal Trade Commission has issued guidelines for such blogger comments, walking a fine line between protecting consumers and infringing on freedom of speech. The main point is that any compensation must be disclosed.
Outfits such as Yelp and Izea also walk a fine line to keep their online buying advice moving without concealing payment or freebies and never refusing payment for a negative review.
That standoff with the regulators may satisfy the law, but consumers should watch out for any purchasing advice they find on their computers. It might be a “sponsored conversation.”