30 October 2020

Fake reviews are a serious problem

James Daley

By James Daley LinkedIn

Review sites have become adept at giving a rosy view of all companies. So who can consumers actually trust when they're buying something?

The internet has made it easier to shop around for almost everything over the past two decades – improving competition and driving down prices as a result.

But when markets become intensely price competitive, the consequences for consumers are not always universally positive. Lower margins often drive companies to cut quality, or to use their loss-leaders as a gateway to get customers to overpay for other products.

In this environment, it’s important that consumers also have a way to choose businesses on quality, allowing those who want to invest in their products and services to be rewarded even if they are charging higher prices.

What's your frame of reference?

When it comes to things like food or drink, it’s easy to make a judgement as to whether something is sufficiently high quality to justify a higher price than the rest of the market. For the most part, supermarket products are small ticket items we buy on a regular basis – so paying a little extra to find out whether a new more expensive brand offers better quality is a fairly low risk exercise.

But in markets where purchases or switches are made infrequently – for example, big ticket household items like TVs or Fridges, or services such as energy and bank accounts – it can be hard to determine who offers great quality or service.

As a result, consumers often end up defaulting to price as the most important factor – which may prove to be a false economy. Buy cheap, buy twice as the old saying goes.

In the world of consumer electricals and other household goods, review sites like Which? try and provide a way of competing on quality – putting products through rigorous testing.

But as more and more different types of electrical products are launched, companies like Which? have their work cut out. Which? may have the resources to review laptops and washing machines, but it’s never going to be able to review disco balls, toy robots or the growing number of other lower ticket electrical items available on the web.

Which reviews can you trust?

As things stand, consumers are left to make their decisions on quality based on Amazon reviews – which are almost always gamed. It’s not uncommon to be offered a bribe to leave a positive review, or a bribe to take down a negative one – rendering most reviews on shopping sites completely useless.

In my world of financial services, comparison sites have never quite cracked the challenge of helping consumers understand what good quality looks like.

Their research tells them that consumers care more about price – and want to spend as little time as possible shopping around for products. As a result, the sites are optimised for these two factors – and the inevitable race to the bottom on quality has become a real problem.

Most comparison sites do have some kind of lens on quality – but invariably, almost all the companies and products end up being rated at 4 or 5 stars. And there’s a reluctance from comparison sites to give a more realistic and starker picture, lest it upsets the providers whose products they are distributing.

Time for regulators to get involved

It’s an issue that regulators desperately need to take another look at. The CMA did a small piece of work looking at the issue of fake reviews a few years ago – but it didn’t result in any real action.

Since then, the issues of fake reviews have got even worse. And even the more legitimate review sites are building their businesses around helping companies stack the deck in their favour.

If you ask the right questions at the right time, it’s easy to get whatever answer you’re looking for. The best time to ask someone if they’re happy with their service or product, for example, is one minute after they’ve bought it. At that time, no one’s going to say they’re unhappy – as they’ve just persuaded themselves that this was the right company to hand their money over to.

It’s in everyone’s interests that consumers have access to reliable and independent reviews which can help show who offers genuinely good quality and service – and who doesn’t. It’s the only way we can stem the race to the bottom on price and allow those companies who invest in quality and service to be rewarded.

This article was originally published in the Collaboration Network journal in October 2020