The FTC is finally cracking down on fake Amazon reviews

The FTC has issued a $12.8 fine on a shady supplement company for paying for fake reviews on Amazon.

In a first-of-its-kind case, the US Federal Trade Commission has taken action on the scourge of Amazon sellers who pay for phony reviews.

The complaint, which seeks a $12.8m settlement, alleges a shady supplement company by the name of Cure Encapsulations artificially boosted its product ratings by working with a third-party company that specializes in crafting fake “verified” reviews.

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According to the complaint, Cure sold a totally legit supplement through Amazon that touted the weight loss benefits of an Indonesian plant (which, in reality, has been shown to cause acute liver failure).

To instill consumer confidence in his product, the company’s founder, Naftula Jacobowitz, turned to amazonverifiedreviews.com — one of 100s of websites that write fake 5-star reviews for a fee.

Records show that Jacobwitz paid at least $1k for a series of 30 reviews; in return, he was promised an average rating of 4.3 stars.

This is a massive, widespread problem

Some 82% of American adults check online reviews before buying a product. As consumers, we place an enormous amount of trust in these review systems and the technology that underlies them. Thing is, an alarming number of online reviews are fake.

Fakespot, a website that ID’s fake reviews, estimates 30% of product reviews on Amazon, and as many as 95% for “Chinese no-name companies, are inauthentic. (Amazon has contested this figure.)

In one study of fake review buying sites, a Northwestern University researcher found that in just 2 months, 11k sellers posted 250k job listings seeking phony reviews, offering between “tens of cents” and $5.

One giant leap for real humans with real opinions

Regulators have known about this issue since the dawn of e-commerce, but until now Amazon has had to take things into its own hands.

As an Amazon spokesperson told TechCrunch, the company has filed suits against more than 1k defendants for “review abuse” since 2015. They’ve also sued the third-party sites that write them.

The FTC’s involvement — the latest in a string of actions it has taken against the tech industry — is welcome for Amazon and other e-commerce platforms. Though as with any federal action, consistent enforcement is a different story.

Time will tell if this was the start of a larger movement or just a one-off public flogging.

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