Amazon takes another swing at dodgy product reviews

The battle against fake online reviews is gearing up just in time for the holiday shopping season.

Amazon (AMZN) this week said it will ban “incentivized” reviews, or product ratings that are provided in exchange for a free or discounted product. The ban comes after the company already took steps against phony paid reviews, with mixed results. Even after legal action from Amazon last year, fake reviews continued to proliferate on the site.

The issue isn’t a small one for Amazon and other e-commerce sites, which rely on honest feedback to help customers make informed decisions. Increasingly, younger buyers place a premium on “authenticity,” and sites that they perceive as providing false or biased information may not earn their repeat business. 

Yet on the other hand, sellers have a huge incentive to game the Amazon system, given that it can be tough to compete with the massive number of merchants now hawking goods on the site.

“Consumers definitely can notice when a review is fake,” said Alex Tarnoff, senior consultant at Vivaldi Partners Group. “Obviously, fake review writers are becoming more sophisticated, but there’s a lack of genuineness of overall tone or over the top in praise, or the inverse, with negatives. It does hurt Amazon’s credibility a bit.”

In a blog post, Amazon said it’s improving its review ratings by introducing an algorithm that gives weight to reviews that are more helpful. It said it’s also suspending, banning or suing “thousands of individuals for attempting to manipulate reviews.” 

Before the ban on incentivized reviews, Amazon had tolerated reviews that were given in exchange for a free or discounted product -- as long as the reviewers were upfront about that. But that system was gamed, according to a report earlier this year from Consumerist. Some reviewers posted hundreds of reviews in just a few weeks, which casts some doubt as to whether they were able to legitimately try out the products. 

What explains that dynamic? It boils down to the fact that there are more than 2 million third-party merchants selling through Amazon, all eager to catch the eyes of online shoppers. A higher rating can pull in more business.

“Manufacturers aren’t necessarily trying to mask a terrible product,” Tarnoff said. “There are instances where a tactic could boost awareness of a product that people aren’t going to go out of their way to write a review of.”

Nevertheless, the proliferation of fake reviews means consumers need to be cautious when relying on ratings. Tools are available to help shoppers figure out whether reviews can be trusted, such as Fakespot. The site was created by software designer Saoud Khalifah, who said he was inspired after he bought a sleep supplement with glowing reviews -- but didn’t work. 

Still, it’s not likely that merchants are going to stop trying to game the system. More is at stake than ever before: The National Retail Federation expects online sales to jump as much as 10 percent to $117 billion this holiday season.