Using a fake yogurt shop as part of a sting operation, New York Attorney General Eric T. Schneiderman cracked down on deceptive Internet reviews. As a result 19 companies entered Assurances of Discontinuances, paid a total of $350,000, and agreed to halt the practice.
“What we’ve found is even worse than old-fashioned false advertising,” Schneiderman told The New York Times. “When you look at a billboard, you can tell it’s a paid advertisement – but on Yelp . . . you assume you’re reading authentic consumer opinions, making this practice even more deceiving.”
The yearlong investigation, dubbed “Operation Clean Turf,” challenged the increasing practice of “astroturfing,” defined by the AG’s office as a form of false advertising involving the “practice of preparing or disseminating a false or deceptive review that a reasonable consumer would believe to be a neutral, third-party review.”
Members of the AG’s office posed as the owner of a Brooklyn yogurt shop suffering from poor reviews and sought out reputation management companies for help. The defendants allegedly violated state statutes on fraud, deceptive practices, and false advertising law by creating the fake reviews and posting them in an attempt to raise online ratings on sites such as Google Local and Yelp. They posted reviews for a teeth-whitening service and a charter bus operator, among other companies seeking positive recommendations.
The investigation revealed that reputation management or search engine optimization (SEO) companies used a variety of techniques, such as paying freelance writers in Bangladesh and Eastern Europe $1 to $10 per review, creating hundreds of fake online profiles on consumer review sites, and providing real customers with $50 gift certificates for authoring a positive review.
Some businesses even solicited review writers on sites such as Craigslist and Freelancer.com, Schneiderman said, with one SEO company posting the following request: “We need a person that can post multiple positive reviews on major REVIEW sites. Example: GoogleMaps, Yelp . . . . 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.”
Companies paid penalties ranging from $2,500 to nearly $100,000 each for a total of $350,000 and agreed to halt the practice. Two of the companies included Swam Media Group, Inc., and Scores Media Group, LLC, which posted 175 fake reviews of dancers at the adult club Scores. eBoxed also reached an agreement with the AG after posting more than 1,500 fake reviews for its clients. The New York City-based SEO company tried to avoid detection by changing the IP address of the computer from which it posted the reviews each week.
To read the AG’s press release about the investigation, click here.
Why it matters: AG Schneiderman’s enforcement action was the largest taken to date by any state or federal agency addressing the issue of astroturfing. “This investigation into large-scale, intentional deceit across the Internet tells us that we should approach online reviews with caution,” Schneiderman said in a press release. “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.” Although the investigation focused on New York-based companies, it could spawn similar actions in other states. Florida has pursued two enforcement actions against a company that posted fake reviews and failed to provide sufficient disclosures, while the Federal Trade Commission brought actions against two different companies for allegedly posting fake online reviews – Legacy Learning Systems in 2011 and Reverb Communications in 2009.