Ten to 15 percent of social media ratings and reviews will be fake by 2014 and at least two Fortune 500 brands will face litigation from the Federal Trade Commission (FTC) over the next two years, according to predictions in a Gartner report.
Gartner said that with consumers increasingly relying on social media ratings and reviews before deciding on where to make purchases, companies are being enticed to pay for favorable recommendations.
"With over half of the Internet's population on social networks, organizations are scrambling for new ways to build bigger follower bases, generate more hits on videos, garner more positive reviews than their competitors and solicit 'likes' on their Facebook pages," said Jenny Sussin, senior research analyst at Gartner, in a statement. "Many marketers have turned to paying for positive reviews with cash, coupons and promotions including additional hits on YouTube videos in order to pique site visitors' interests in the hope of increasing sales, customer loyalty and customer advocacy through social media 'word of mouth' campaigns."
On the downside, organizations paying for phony reviews can and have faced both public humiliation as well as monetary fines. Under a 2009 FTC ruling, paying for positive reviews without disclosing that the reviewer had been compensated equates to deceptive advertising and would be prosecuted as such. Gartner noted this as the FTC is beginning to crack down more on this practice of fake reviews/ratings. Also, reputation firms are identifying fake and defaming reviews and requesting the reviewers or host site remove them or face legal repercussions. Gartner predicted a similar market of companies to emerge specializing in reputation defense versus reputation creation.
Gartner believes that although consumer trust in social media is currently low, consumer perception of tightened government regulation and increased media exposure of fake social media ratings and reviews will ultimately increase consumer trust in new and existing social media ratings and reviews.
"Organizations engaging in social media can help to promote trust by openly embracing both positive and negative reviews and leveraging negative reviews as a way to encourage customers with positive product or service experiences to share them on review sites as well," Ms. Sussin said. "They should also respond to ratings and reviews in an official capacity to demonstrate willingness to engage in productive conversation with anyone."
Is it appropriate for retailers or brands to offer incentives for 'likes' on Facebook?