Smart Buying

Why You Can't Trust Online Reviews

Online ratings services are for-profit businesses that sell ads to the same local companies their users review—a potential conflict of interest.

Q. My friend says that some of my favorite online ratings services—with user reviews of restaurants, stores and local service providers—are tainted by a variety of unethical practices, such as fake reviews and favoritism toward firms that advertise on the sites. Is she right?

A. I’m afraid so, based on the number of complaints and lawsuits surrounding online ratings services. That’s why you should take all user reviews with many grains of salt.

Here are a few of the unethical practices seen in this burgeoning Web industry:

-- Small businesses have paid strangers to write glowing reviews with no basis in customer experience (in other words, outright fraud). Others have swayed customers with discounts for posting a positive review (a gentle bribe).

-- Businesses have paid people to post negative reviews of their competitors.

-- Small businesses have been strong-armed by Web sites’ ad-sales staff, who hint that paying for ads will induce the site to hide negative reviews and/or give advertisers favored positioning in search results.

The online ratings firms say that their sophisticated software can reliably filter out bogus user reviews (an unverifiable claim). They also deny that their employees use promises or threats to persuade local businesses to advertise with them.

But these service-review sites are all young, for-profit businesses whose success is primarily based on selling advertising to the same local companies that their users review—a potential conflict of interest.

There is no nationwide, nonprofit ratings site for local services, supported entirely by subscribers and carrying no advertising—that is, nothing analogous to what Consumer Reports magazine does for national products. However, the nonprofit Consumers’ Checkbook magazines and Web site do this for local services (but not restaurants) in seven metro areas: Boston, Chicago, Minneapolis/St. Paul, Philadelphia/Wilmington, San Francisco, Seattle and Washington. And the many nonprofit Better Business Bureaus—whose ratings are based on a firm’s adherence to the BBB code and their record of resolving customer complaints well—are beginning to edge into reviews, too.

Have a money-and-ethics question you’d like answered in this column? Write to editor in chief Knight Kiplinger at ethics@kiplinger.com.

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