TribLIVE

| Business


 
Larger text Larger text Smaller text Smaller text | Order Photo Reprints

Businesses hurt by fake online reviews

On the Grid

From the shale fields to the cooling towers, Trib Total Media covers the energy industry in Western Pennsylvania and beyond. For the latest news and views on gas, coal, electricity and more, check out On the Grid today.

By The Los Angeles Times
Saturday, July 6, 2013, 12:01 a.m.
 

Consumers often turn to the Internet to research a product before buying. Fake reviews are always a concern, and the problem may be bigger than previously thought.

There have long been reports and rumors of businesses posting negative reviews of their competitors' products or companies that pay or reward users to write glowing reviews, a practice known as cyber-shilling.

But research shows that loyal customers are writing extremely negative reviews about products they never purchased.

Marketing professors Duncan Simester of the Massachusetts Institute of Technology and Eric Anderson of Northwestern University did a study based on reviews posted on the website of a major private-label apparel company.

The duo found that about 5 percent of the reviews were written by customers with no record of actually buying the item. Those reviews were “significantly more negative” than the others.

Those bogus reviews have consequences, Simester said. Low ratings result in significantly less demand for an item for at least 12 months.

“We have some evidence that these negative reviews do drive purchasing decisions and can reduce sales,” he said.

Simester and Anderson said they were also able to replicate the effect using book reviews on Amazon.com.

All told, very few customers write reviews. For the private-label apparel brand, less than 2 percent of the company's customers wrote reviews. People who write reviews generally buy more items, are more likely to buy at a discount, are more likely to return items, and are more likely to buy new or niche items.

 

 
 


Show commenting policy

Most-Read Business Headlines

  1. Oil prices continue descent, dragging market indexes lower
  2. Household debt on the rise after 5-year decline
  3. Housing prices nudge upward as more homes on market
  4. Butler County firm Deep Well Services tackles tough gas wells
  5. Westinghouse to construct colossal nuke plant in Turkey
  6. Axed contracts push doctors from network, UPMC says
  7. U.S. Steel reorganizes operating units
  8. Generic drug price spikes draw Senate inquiry
  9. Merry marijuana: Holiday shoppers urged to think pot
  10. Budweiser beer brand gives Clydesdales pink slip for holidays
  11. Positive economic, earnings reports return Dow, S&P 500 to record territory
Subscribe today! Click here for our subscription offers.