The Fraud Behind Fake Online Reviews

Paying People to Lie – You Can’t Believe Everything You Read on the Internet


Dan3By Daniel W. Draz, M.S., CFE, Principal, Fraud Solutions

The announcement last week by New York Attorney General Eric Schneiderman regarding a settlement with 19 companies writing fake online reviews should not have come as a surprise to anyone as you really can’t believe everything you read on the Internet. In fact, it confirmed what we already knew: the Web has vulnerabilities. These vulnerabilities allow individuals to be anyone, or anything, at any time, and the Internet anonymity issue directly contributes to a wide variety of e-commerce ethics problems, deception, misrepresentation and illegal activity as outlined in this investigation.

Internet anonymity is really nothing new, it goes back to the early days of online chat rooms when men thought they were talking to women only to surprisingly learn that they were really chatting with 40’s ish, balding, overweight, males pretending to be women. This, of course led to an Internet joke about one online company’s chat rooms, “_______, where men are men and women are men!” The moral of the story: things aren’t always what they appear online as evidenced in this case.

The NY AG’s investigation demonstrated a couple things. First, that this is a more prevalent issue than most people thought. Secondly, writing fake online reviews is a blatantly false, misleading and deceptive form of “false advertising” to consumers and the FTC concurs. While writing fake online reviews is just the natural progression of Internet growth (creating online profiles and social media accounts), the reality is that there really is nothing to prevent anyone from creating fake social media accounts, fake account names and fake online profiles despite various Terms of Service agreements to the contrary.

Certainly, if social media companies catch you engaging in this type of behavior, they’ll remove the account from their system but the reality is that the majority of people don’t get caught. This then becomes the foundation for writing fake online product or service reviews, looking better to the consuming public, and increasing sales and revenue (ROI).

Obviously, we should all know by now that you can’t believe everything you read, hear on radio, or see on TV and the Internet. (Orson Wells proved this point quite nicely on October 30, 1938 when he terrified the entire country one Sunday night with what millions thought was an alien invasion). Advertisers have even picked up on the “nothing is what it appears to be online” theme with the recent TV ad:

Woman: “He’s a French model.”

Man: “Where’d you hear that?”

Woman: “On the Internet.”

The issue that this news story really highlights is the fact that some companies, looking to gain a competitive edge, utilized an Internet flaw to knowingly and intentionally exploit the online review process, purposely misrepresent the facts and have people pretend to be someone they were not, all so that they could write fake online reviews for businesses and deceive consumers online. Add all these facts up and this is the quintessential definition of fraud.

A reporter asked me the other day whether the companies knew what they were doing was illegal? While I don’t know the answer to that because I wasn’t involved in the case,   I can’t help but think that if there was even a question as to the legality of the practice, companies should have checked with their business counsel, who would have advised them to run, not walk, away from this practice as quickly as possible. That said is there a specific law which says you cannot create fake profiles and write fake online reviews? Not to the best of my knowledge. If there was, Schneiderman and the FTC, in other cases, likely would have used it.

The reality is that cyber laws have not kept pace with cyber activity as technology always outpaces the legal system. That issue aside, even if companies didn’t see laws which specifically prohibited the creation of fake online profiles and fake online reviews, the fraud statutes in almost every state in the country (if not every state) have language which specifically addresses misrepresentation and the intent to deceive, which is clearly covered here no matter how you slice it.  

Simply because the Web is flawed in this area and individuals or companies can create fictitious social media accounts and write fake online reviews, doesn’t mean that companies should engage in the practice. For that matter, neither should they blatantly solicit others to do it on their behalf so that they can distance themselves from the act, claim plausible deniability and “disavow any knowledge of the mission… this tape will self destruct in five seconds.”

On a positive corporate note, “Yelp” was identified as cooperating in this investigation, perhaps even spearheading it as an industry initiative. When I was asked “what’s in it for them?” My response was twofold: “they’re protecting their brand from disreputable and shady industry business practices which, if unchecked, devalue legitimate online reviews posted on their site and cause consumers to lose confidence in what’s posted there (Industry guilt by industry association so to speak). But perhaps more importantly they did the ‘right thing,’ took the ethical ‘high road’ and were just being good corporate citizens.”

For a fraud professional, the biggest questions that this story raised for me are about the unethical business practices associated with parts of the online review industry. Aside from Yelp doing the “right thing,” have we really arrived at a place in society where companies think that doing such things, regardless of whether they technically “can be done,” is acceptable in today’s competitive business climate? Is it acceptable to make your client’s look good in the public realm while operating an organized scheme to deceive consumers? Is doing so good for the company’s long term reputation and brand which will surely get clobbered once the news goes public? We previously discussed brand damage (The “F” Word May be the Death of your Business) in an earlier article.

Hopefully, we have not arrived at that place and your company strongly feels the same. Compete honestly, openly and fairly, which are core principles our system of free enterprise was founded on, not using lies, deception and misrepresentations. Writing fake online reviews – if you had to cheat to succeed, you really didn’t succeed at all.


 About the Author: Daniel W. Draz, M.S., CFE is the Principal of Fraud Solutions, a global fraud consulting firm located outside Chicago. Draz is a recognized leader in the fraud profession, providing innovative enterprise anti-fraud risk management strategies, insightful observations, fraud training and thought leadership to clients. He works with companies to improve their enterprise fraud risk management efforts and reduce major fraud losses. Connect with us on LinkedIn:, follow on Twitter: @_fraudsolutions or via e-mail:


1 Comment

  1. Bernie Weiss on October 1, 2013 at 9:10 am

    Are product reviews written by marketers any different from native advertising (ads masquerading as editorial content)? We’ve come to a sad state indeed, when some marketers believe it’s necessary to trick potential customers into considering their products.