New York — Attorney General Eric T. Schneiderman announced that 19 companies had agreed to cease their practice of writing fake online reviews for businesses and to pay more than $350,000 in penalties.
"Operation Clean Turf," a year-long undercover investigation into the reputation management industry, the manipulation of consumer-review Web sites, and the practice of “astroturfing,” found that companies had flooded the Internet with fake consumer reviews on websites such as Yelp, Google Local and CitySearch. In the course of the investigation, the Attorney General's office found that many of these companies used techniques to hide their identities, such as creating fake online profiles on consumer review websites and paying freelance writers from as far away as the Philippines, Bangladesh and Eastern Europe for $1 to $10 per review.
By producing fake reviews, these companies violated multiple state laws against false advertising and engaged in illegal and deceptive business practices.
"Consumers rely on reviews from their peers to make daily purchasing decisions on anything from food and clothing to recreation and sightseeing," Schneiderman said. "This investigation into large-scale, intentional deceit across the Internet tells us that we should approach online reviews with caution. And companies that continue to engage in these practices should take note: ‘Astroturfing’ is the 21st century's version of false advertising, and prosecutors have many tools at their disposal to put an end to it."
In recent years, the reputation management industry has exploded as businesses have become increasingly concerned about their online reputations. So-called search engine optimization (SEO) companies routinely offer online reputation management as part of their services.
Posing as the owner of a yogurt shop in Brooklyn, representatives from Schneiderman's office called the leading SEO companies in New York to request assistance in combating negative reviews on consumer-review websites. During these calls, representatives from some of these companies offered to write fake reviews of the yogurt shop and post them on consumer-review websites such as Yelp.com, Google Local and Citysearch.com, as part of their reputation management services.
The investigation revealed that SEO companies were using advanced IP spoofing techniques to hide their identities, as well as setting up hundreds of bogus online profiles on consumer review websites to post the reviews. The investigation found that many consumer-review websites have implemented filters to detect and filter or delete fake reviews, with Yelp's being the most aggressive.
"More than 100 million visitors come to Yelp each month, making it critical that Yelp protect the integrity of its content," said Aaron Schur, Yelp's senior litigation counsel. "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 N.Y. 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."
Besides using their own employees to write and post the reviews, the companies hired freelance writers from as far away as the Philippines, Bangladesh and Eastern Europe for $1 to $10 per review. One SEO company required that freelancers have an established Yelp account of more than 3 months old, have more than 15 reviews (at least half unfiltered), and 10 Yelp "friends."
Attorney General Schneiderman's office also discovered solicitations on sites such as Craigslist.com, Freelancer.com and oDesk.com to hire people to write fake reviews. In one case, an SEO company posted the following solicitation:
“We need a person that can post multiple positive reviews on major REVIEW sites. Example: Google Maps, Yelp, CitySearch. Must be from different IP addresses … So you must be able to have multiple IPs. The reviews will be only few sentences long. Need to have some understanding on how Yelp filters works. Previous experience is a plus. ...”
Multiple studies conclude that online reviews can make or break companies. According to one survey, 90 percent of consumers indicated that online reviews influence their buying decisions. A widely cited Harvard Business School study from 2011 estimated that a one-star rating increase on Yelp translated to an increase of 5 to 9 percent in revenues for a restaurant. However, research firm Gartner projects that between 10 and 15 percent of social media reviews will be fake by 2014.
The OAG has entered into Assurances of Discontinuance with 19 companies, with penalties ranging from $2,500 to just less than $100,000. The practice of preparing or disseminating a false or deceptive review that a reasonable consumer would believe to be a neutral, third-party review is a form of false advertising known as “astroturfing,” which violates the New York Executive Law and New York General Business Law.
The investigation was conducted by Assistant Attorneys General Clark Russell and Jordan Adler, and Investigator Vanessa Ip in the Internet Bureau. Also assisting in the investigation was Deputy Bureau Chief Susan Scharbach of the Real Estate Finance Bureau, under the supervision of Executive Deputy Attorney General of Economic Justice Karla G. Sanchez.
