Introduction
Social proof is a key element when it comes to the success of your business.
Lately, this golden piece of information became more and more known among entrepreneurs and marketing professionals from various industries. While this may sound like a positive thing at a first glance, this knowledge facilitated the beginning of a new trend: buying and selling online customer reviews.
In the following article, you’ll learn about the Federal Trade Commission (FTC) recent ban on fake online reviews and why such fabricated feedback can actually harm your brand reputation.
FTC’s rule against bought online customer reviews
While buying and selling online customer reviews has always been frowned upon, it’s important to discuss the legal limitations regarding this issue that were enforced in the United States this summer.
On August 14, 2024 the U.S. Federal Trade Commission on Wednesday finalized a ban on companies that intentionally display bought online reviews on their digital platforms. It’s important to mention that this ban includes fake customers, company insiders and artificial intelligence (AI).
The biggest customer feedback platforms in the US (Google, Amazon and Yelp) agree with the FTC ban.
Going against the rules can deeply impact one’s business, as the penalty can reach up to $51,744 per violation.
The main tactics that the new FTC ruling prohibits are:
- Writing, selling and buying fake customers reviews and testimonials
- Failing to make disclosures about insider reviews and testimonials
- Illegally suppressing negative customer feedback
- Buying positive or negative reviews
The last point benefits from additional mentions, as it involves a necessary distinction between paid and incentivized reviews.
Paid vs. incentivized online customer reviews
While they might sound like the same thing, paid and incentivized online customer reviews present differences when it comes to how the reviewer is compensated to provide feedback.
It’s imperative to understand the differences between the two, as an important segment of this article focuses on legal aspects regarding the limitations of generated customer reviews.
Paid customer reviews imply that the reviewers receive direct compensation (usually money) for writing a review. It can either be a positive online review for the company buying the customer feedback or a negative one for a competitor that’s seen as a threat by the business paying for the fake reviews.
Incentivized customer reviews involve non-monetary indirect compensation, such as discounts or free products in exchange for providing online feedback. While the reviewer is not required to write a positive review, there’s definitely a subtle bias towards it in the incentive proposal.
The FTC bans paid (our bought) online reviews, but only regulates incentivized feedback. That means that companies are still allowed to offer discounts and free products in exchange for customer feedback, but they’re not allowed to suggest the positive or negative nature of the rating and of the content attached to it.
How paid customer reviews damage your online brand reputation
Buying customer reviews can seriously damage your online brand reputation, as they represent fake social proof.
Social proof is a phenomenon where people base their actions on the opinions of other consumers in order to establish the quality of a product or service they consider purchasing.
At first, users may be tempted to view your business in a positive light when they see all the 5-star ratings and reviews. However, there’s always a point when the content of the reviews can become repetitive or compliment the business in a way that seems too good to be true.
That’s when paid online reviews backfire and become red flags instead of effective marketing tools.
If your audience starts to doubt the authenticity of your customer feedback, they will spread the information through word of mouth, negative online reviews or social media posts that will quickly damage your brand reputation.
You should also keep in mind that online review platforms like Google, Amazon and Yelp are always on the lookout for fake customer reviews. If they discover that you display fake customer feedback, they may remove your online reviews, reduce your visibility or even ban your business profile from their platform.
As 86% of consumers believe that authenticity is a key factor when deciding which brands they like and support, it’s imperative to make sure that your online presence is based on information that matches the reality and your customers know exactly what to expect when they have their first contact with your business.
Conclusion
Buying customer reviews can deeply hurt your online brand reputation and damage your credibility in the eyes of your customers and potential clients.
To make the best out of your authentic online reviews, use a review management tool to aggregate and monitor your customer feedback from all over the internet.
Contact FeedCheck today and learn how your online reputation can become a detrimental tool for your marketing strategy.