Fake Reviews Causing Shoppers to Abandon Retail Brands

With the threat of fake reviews growing in the retail industry, the Federal Trade Commission (FTC) launched its first ever case challenging paid fake reviews on retail websites. As the issue becomes more prevalent, leading online retailers like Amazon.com and Walmart are increasingly under fire on this topic.

Industry data gathered by Fakespot, a site that analyzes online reviews to determine which ones are fake, found that around a third of reviews on sites like Sephora were fake or unreliable, while 30 percent of Amazon’s reviews are fake.

However, fake reviews don't solely affect large retailers, as any retailer with an online store or marketplace can be affected.

Consumers Want Reviews, But They Don’t Trust Them

To understand the downstream effects, Sift recently polled 1,000 U.S. consumers, looking at their experiences, behaviors and perceptions relating to fake reviews. The data shows that consumer perceptions and feelings towards fake reviews highlights the risk of brand abandonment and potential for retailers to suffer long-term revenue loss.

In fact, 70 percent of respondents in Sift’s survey believe customer reviews for online products and services are more important than star or numerical ratings. Consumers see online reviews as highly important, but still don’t trust them or see them as reliable, with 85 percent perceiving online reviews as fraudulent. And rightfully so — as fraudsters become more sophisticated, fake content becomes a key vehicle in their online attacks.

While the risks associated with fake reviews are increasing in the areas of consumer mistrust and loss of brand loyalty, businesses can’t simply turn them off without risking a different set of challenges to their bottom line. For example, if fake reviews aren’t policed and removed if fraudulent, consumers will look to other brands with trusted reviews to drive purchase decisions.

Reviews: Brand Risk or Asset?

Sift’s survey found that around one-third of consumers said they’ve returned items or didn't purchase something at all due to a fake review. What’s more, 40 percent noted they would never buy from a business again if they found out they were duped into a purchase by a fake review. Eliminating reviews can’t be the solution. However, at what cost does permitting reviews become a liability?

Fake reviews create consumer mistrust as buyers look towards brands they regularly engage with to provide accurate information and authentic reviews on products. When consumers no longer feel they can trust a retail brand, they become dissatisfied, ultimately abandoning that brand in search of greener (or more trustworthy) pastures elsewhere.

How Brands Can Stop Fake Reviews Long Term

Retailers must evolve their fraud-fighting strategies to prevent against all types of online vulnerabilities. Based on what we’ve seen in recent years across the fraud landscape, legacy methods for fighting fraud aren’t a match for fraudsters' tactics anymore. Brands need to be more proactive with digital trust, implementing digital trust and safety as a key strategy in their fraud-fighting methods.

As a holistic mind-set and approach to risk and fraud issues, a digital trust and safety strategy allows retailers to combat fraud and risk concerns while protecting their customers, growing their user base, and increasing positive engagement in tandem with company growth goals.

Jeff Sakasegawa is a trust and safety architect at Sift, the leader in digital trust and safety, empowering companies of all sizes to unlock revenue without risk.