Fake online reviews can be a minefield for small business owners. Bribing customers for “real” online reviews can be equally explosive. FTC considers reviews to be advertising and its laws apply.

Mpact Magic, a Las Vegas-based reputation management company has recently completed a study compiling the challenges faced by small businesses that are attempting to take advantage of consumer reviews, but may be entering dangerous territory in the process.

The Federal Trade Commission has issued clear guidelines for the use of consumer reviews in online advertising. The fact that most business owners, when asked, never considered online reviews to be advertising in the first place, is the center of the problem and the basis for the Mpact Magic study. The FTC sends the clear message to business owners that they must, “follow the principles of truth in advertising” when using online reviews to promote their businesses.

Compensating for Compliments
Solicitation of reviews is not, in and of itself, illegal. Where business owners run into a snag is the “bribing” of a customer to leave a positive review. “Any quid pro quo arrangement in which the customer is promised anything for leaving a positive review can be considered illegal,” says Roger McManus, President of Mpact Magic. “That is why we advise our clients to be very careful in their language when approaching customers for feedback.”

Extending courtesies to customers after they have said nice things – or even offering compensation when a customer has felt slighted – is within the rules. It is the expectation of a reward for a specific action that promotes a business that represents the line that must not be crossed.

“Astroturfing”
The term “astroturfing” applies to companies that create fake comments online that improve their image to readers. Google+, Yelp and most other review sites have built in systems to catch fake reviews and have their own systems of punishment in place. Civil penalties can be issued by various state or federal agencies, as well.

In a recently publicized Yelp investigation, the company had its own employees place Craig’s List ads offering to post positive Yelp reviews in exchange for payment. When business owners approached them about buying the service, Yelp revealed the “sting”. Since Yelp’s actual legal recourse is limited, the company simply decided to shine a light on the offenders by posting a warning on their Yelp listings that reads, “We caught someone red-handed trying to buy reviews for this business. We weren’t fooled, but wanted you to know because buying reviews not only hurts consumers, but also honest businesses that play by the rules. Check out the evidence here with a link to the proof of the offense.

In perhaps the first case of large-scale astroturfing, the State of New York went after Lifestyle Lift a plastic surgery practice for having its own employees flood the Internet with positive reviews. According to a release from the Attorney General’s office, “Lifestyle Lift employees published positive reviews and comments about the company to trick Web-browsing consumers into believing that satisfied customers were posting their own stories. These tactics constitute deceptive commercial practices, false advertising, and fraudulent and illegal conduct under New York and federal consumer protection law.”
Inherent Negative Bias

"The challenge for business owners is the system is inherently negatively biased,” McManus says. “Customers of a business expect good service and usually receive it. When they don’t they tend to get motivated to speak up online. When they do, they are silent.”

It is this negative bias that is the foundation for the solution provided by Mpact Magic. The consumer is asked three questions to determine a customer’s satisfaction with the exchange. If the consumer is not happy, the system generates a text message to the manager on duty for immediate action. If the customer has something nice to say, the system guides him or her to posting it online. Incentives are not part of the process.

The whole review process is set up for consumers to have truthful information about businesses with whom they may do business. Good, solid business owners need only have a way to get customers to do what they tend to do anyway – say nice things. Skirting the law to scam the system is a short-sighted strategy.