The Competition and Markets Authority (CMA) has investigated a number of companies following allegations of fake online reviews and paid endorsements. The impact on businesses – especially in the hospitality industry – can be disastrous, with Igniyte’s latest research revealing that one in six UK businesses believe a malicious review could destroy their business entirely.
The CMA, UK’s primary competition and consumer authority, has released a report following an investigation earlier this year into allegations of fake reviews and paid endorsements.
The investigation has found that some companies are writing or commissioning both positive and negative reviews online to boost their own ratings on review sites and to undermine their rivals.
The impact on businesses – especially in the hospitality industry – can be disastrous, with Igniyte’s latest research revealing that one in six UK businesses believe a malicious review could destroy their business entirely.
The investigation also found that some review sites are not publishing genuine negative reviews and instead, encouraging the business to respond to the customer’s complaint offline. Whilst this solves the individual’s complaint, this practice gives other consumers a less complete picture of what reviewers have said about a business.
These practices are not only affecting businesses, but they’re misleading consumers, too, who trust online reviews as a reliable source of information.
The CMA has found that 54% of UK adults use online reviews and 80% of consumers use reviews before making a purchase, meaning consumers could be encouraged to make a bad choice.
In the hospitality industry, the CMA found that 68% of consumers said that the online review was “much more important” or “a little more important” than other sources of information.
Igniyte’s recent research found that over half (51%) of UK companies have been hit by unfounded criticism and malicious postings or have been targeted by trolls in the past year.
With one in five UK businesses now spending up to £30,000 a year trying to put things right, the CMA’s investigation has come at a crucial time.
The CMA has stated it will continue to investigate its concerns and will enforce ‘action’ where appropriate to ensure businesses compete fairly in compliance with the law.
Nisha Arora, CMA Senior Director, Consumer, has said: “We have opened an investigation into businesses that may be paying for endorsements in blogs and other online articles where the payment may not have been clear to readers.”
Caroline Skipsey, Igniyte’s Managing Partner, commented on the CMA investigation and Igniyte’s research: “Used properly, review sites and forums are a force for good – giving consumers a much needed voice.
“But while businesses of all kinds welcome the opportunity to gather feedback, a growing number are falling victim to unjustified negative content online and the effect can be devastating.
“We welcomed the chance to participate in the investigation at the CMA’s request. We’d recommend businesses and review sites to take heed of the CMA’s clear guidance on the practice of online reviews.
“Paying for fake reviews and placing unsubstantiated content doesn’t fix the real business issues – if your business is subject to genuine negative reviews, the only way to overcome it is by listening to your customers and addressing their concerns.”
Igniyte works with clients to create strong online reputations that can withstand this type of unjustified negativity and often works closely with legal teams to challenge and remove content on behalf of companies and individuals.
Under the Consumer Protection from Unfair Trading Regulations (CPRs); businesses have been advised the following:
- Do not create the false impression that content has been written by a consumer
- Do not mislead consumers about the identity of the reviewer
Review sites have also been warned, guidance given to them includes:
- Be clear about how reviews are obtained and checked
- Publish all reviews – even negative ones, provided they are genuine and lawful
- Disclose commercial relationships with businesses that appear on their site
- Have procedures in place to identify and remove fake reviews.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
