I am going to be on the 700 WLW today talking with Eddie Fingers and Tracy Jones about “reputation management” and the issue of phony online reviews. Coincidentally enough, I came across this piece detailing how Eric Schneiderman , the New York Attorney General, recently busted 19 “online reputation management” based on their practice of submitting phony online reviews. The companies will pay a total of $350,000 in fines. It is apparently okay to “manage” a reputation, as long as you don’t fictionalize it.
I published a “Strictly Legal” column on the issue of fake reviews recently. And I noted that it is a problem that may not lend itself to traditional fraud litigation. A service like Yelp! is affected by the practice, because its business model depends on providing authentic and honest reviews. But when shady reputation managers phony up the process, how does Yelp! prove damages? And an individual consumer who may get lulled into trying a lousy restaurant can’t really prove any significant harm.
So this may be one of those areas where the remedy is going to have to come on a more macro scale, such as attorneys general taking the lead. I suspect New York is not going to be the only state where this type of enforcement occurs.