New York Regulators Target Fake Web Ratings

Successful sting against 19 companies could become legal hedge against online deception.

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Officials fromNew York's Office of the Attorney General ran a year-long sting operation against fake online ratings by posing as a yogurt shop, which resulted in 19 companies agreeing to cease their misleading practices and pay a combined $350,000 in penalties, the office announced on Monday.

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New York Attorney General Eric Schneiderman said in a press release on Monday that the penalties for illegal and deceptive business practices were directed both at companies and at the search engine optimization services that helped create fake reviews. Officials from Schneiderman's office posed as the owner of a yogurt shop asking New York SEO firms for help combating negative reviews online, and some firms offered to create fake positive reviews on websites including Yelp, Google Local, and CitySearch.

"This investigation into large-scale, intentional deceit across the Internet tells us that we should approach online reviews with caution," Schneiderman said. "And companies that continue to engage in these practices should take note: 'Astroturfing' is the 21st century's version of false advertising, and prosecutors have many tools at their disposal to put an end to it."

Aaron Schur, Yelp's senior litigation counsel, said in the press release that Schneiderman's success in halting the deceptive ratings would increase the quality of ratings and recommendations on Yelp.

"More than 100 million visitors come to Yelp each month, making it critical that Yelp protect the integrity of its content," said Schur. "We take many steps to do this, including the use of automated filtering software, leveraging our vast user community for tips about suspicious content, undercover sting operations, legal action, and cooperation with law enforcement."

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Techniques used to create fake ratings included creating fake profiles on consumer review websites, and paying writers to create ratings from foreign countries including the Philippines, Bangladesh and those in Eastern Europe for $1 to $10 per review. Marketing companies penalized in the investigation asked for fake reviews directly on websites including Craigslist.com, Freelancer.com and oDesk.com.

The success of this investigation raises the risk that marketing companies and businesses trying to game the online reputation system could face a lawsuit from a competitor, or an investigation from an attorney general or the Federal Trade Commission, says David Weslow, a partner at Wiley Rein LLP with expertise in intellectual property and technology law.

"This appears to be the largest investigation of its kind, since many online ratings investigations involve a single company," Weslow says. "I think consumers will become increasingly aware of websites that are not doing a good job of screening for fake reviews. It's remarkable that it's just as easy to purchase a fake review as it is to purchase 1,000 Twitter followers, or 1,000 Facebook 'likes.'"

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