Fake Online Review Firms Reach Settlement With New York

As posted on September 23, 2013 on www.bloomberg.com

By Christie Smythe

More than a dozen firms that produce fake online reviews of businesses agreed to stop the practice under a settlement with the New York Attorney General Eric T. Schneiderman.

The attorney general’s office said today that 19 companies involved in producing bogus reviews will also pay $350,000 in penalties. An undercover probe dubbed “Operation Clean Turf” turned up evidence that the companies were paid by local businesses to flood the Internet with comments on websites including Yelp, Google Local and CitySearch, the office said.

“‘Astroturfing’ is the 21st century’s version of false advertising, and prosecutors have many tools at their disposal to put an end to it,” Schneiderman said in a statement.

The companies were also accused of violating state laws against deceptive business practices.

Online reviews can have a dramatic effect on local businesses, University of California, Berkeley economists found in a 2011 study. The research concluded that an extra half-star rating on Yelp could increase a restaurant’s likelihood of filling all of its tables by 49 percent, according to the study.

In the probe, investigators posed as the owner of a yogurt shop in Brooklyn, New York, and called search-engine optimization companies for help in combating negative reviews, according to Schneiderman’s office. The companies subject to today’s settlement offered to provide fake reviews by freelance writers from places including the Philippines, Bangladesh and Eastern Europe, the office said.