Amazon Cracks Down on 'Pay for Praise' Scams
Amazon has banished more than 50,000 sellers from its platform as part of an effort to stop vendors from paying customers for writing good reviews about their products, Bloomberg reports.
When they sign up for Amazon’s fulfillment service, sellers must agree that they will not compensate customers for saying nice things about them but the practice has become widespread, with customers frequently receiving emails from sellers enticing them to write a good review.
The problem with artificially positive reviews, of course, is that it is deceptive and diminishes the reliability of the ratings that many consumers rely on when selecting products.
Amazon used to look the other way at sellers who ginned up good reviews but in 2016, it began cracking down on violators. The crackdown took on more urgency in the past few months and Bloomberg said up to 50,000 vendors have been ousted since then.
Chinese vendors devastated
The action has devastated the Chinese vendors who make up a large share of the inventory on Amazon’s platform, an official of the Cross Border Association, a trade group based in Shenzhen, China, told Bloomberg.
The industry “has been almost completely broken,” according to the association’s president, Wang Xin. Many of the affected companies have announced layoffs and some have declared bankruptcy, according to Marketplace Pulse, a research firm.
Amazon said that in 2020, it “stopped more than 200 million suspected fake reviews before they were ever seen by a customer” but the automated system responsible for those actions didn’t detect more secretive methods like sellers adding product inserts with an offer for a gift card in exchange for a review or discount groups on social networks, Marketplace Pulse said.
FTC takes an interest
The Federal Trade Commission has also been taking up the cause lately. In 2019, it reached a settlement with Cure Encapsulations, Inc., which it had accused of making false and unsubstantiated claims for its garcinia cambogia weight-loss supplement.
The FTC said the company had paid a third-party website to write and post fake reviews on Amazon.com.
“People rely on reviews when they’re shopping online,” said Andrew Smith, then the Director of the FTC’s Bureau of Consumer Protection. “When a company buys fake reviews to inflate its Amazon ratings, it hurts both shoppers and companies that play by the rules.”
The FTC charged that the company paid amazonverifiedreviews.com to create and post Amazon reviews of their product. The FTC said that the Cure Encapsulations CEO told the website’s operator that his product needed to have an average rating of 4.3 out of 5 stars in order to have sales.
“Please make my product … stay a five star,” he said, according to the FTC.