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NY State Fines 19 Fake Online Review Companies $350K

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Photo: Michael Dorausch

The state of New York is cracking down on fake online reviews after an undercover investigation in which employees from the Attorney General's office posed as the owners of a Brooklyn yogurt shop trying to up their online ranking. 19 companies have agreed to cease manipulating sites like Yelp, and will pay more than $350,000 in fines. The companies by and large operated in two ways: they either tried to trick automatic filters by changing their IP addresses when writing fake reviews, or they paid/gave deep discounts/free items to people with legitimate reviewing accounts. Attorney General Eric T. Schneiderman calls the practice of "astroturfing" "the 21st century's false advertising."

The AG investigation found that by calling these SEO/marketing companies posing as the yogurt shop, eventually an employee would offer to write fake reviews for them on sites like Yelp, CitySearch, Google Local, and more. Doing so "violated multiple state laws against false advertising and engaged in illegal and deceptive business practices." Fake reviews: not just shady, also illegal.

Complaints about fake reviews have plagued Yelp for years. A batch of FTC complaints revealed last year thanks to a Freedom of Information Act request found many complaints along the lines of "What yelp does is that they prey on restaurants with bad bogus reviews." Aaron Schur, Senior Litigation Counsel for Yelp, told the Attorney General's office the site takes the problem of fake reviews very seriously:

We take many steps to do this, including the use of automated filtering software, leveraging our vast user community for tips about suspicious content, undercover sting operations, legal action, and cooperation with law enforcement. We applaud NY Attorney General Schneiderman for his willingness to tackle the issue of illegal fake reviews head on, and for his success in shutting down these operators. We look forward to continuing to cooperate with the New York Attorney General's office and any other interested law enforcement office or regulator to protect consumers and business owners from efforts to mislead.

One of the companies fined by the Attorney General's investigation, La Pomme Nightclub, was actually also busted by Yelp itself earlier, and was one of the companies branded with a little detective icon marking it as unreliable.

Companies that produce fake reviews aren't really that uncommon. A quick search of Craigslist reveals these types of ads aren't really hard to find: Some claim to be small businesses looking to up their ratings (a loss of even half a star has been shown to significantly reduce business). "We're looking for Yelp accounts who have added a minimum of 10 reviews," says one ad. Others are more strict:

Hello, we are looking for active Yelpers ( 20+ unfiltered reviews) to review our business. Also looking for Elite Yelpers. If this sounds like the gig for you, please reply with "YELP" in the subject bar and include your yelp profile. We pay $50 for a unfiltered review

And, of course, this has been going on for some time. On Charlie Rose earlier this year, CEO Jeremy Stoppelman defended Yelp's built-in filtering system, saying it errs on the side of caution by separating the reviews "consumers should probably rely on and which are the ones we're not so sure about. And we set aside the ones we're not so sure about." But these companies don't even pay out until reviews appear unfiltered. How can Yelp's filter system defend against that?

The NY AG report cites a statistic that say by 2014, "between 10% and 15% of social media reviews will be fake." So, while these 19 companies are definitely a start, they also only scratch the surface.

· 19 Companies To Stop Writing Fake Online Reviews And Pay More Than $350,000 In Fines [AGNY via Daily Dot]
· All Yelp Coverage on Eater [-E-]

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