NY AG Mows Down Astroturfing

• by Thom Forbes , Featured Columnist @tforbes, September 25, 2013

It probably did not come as a surprise to you to learn that some of those online reviews for products and services on sites such as Yelp and Google Local from users who claim them to be “too good to be true” turn out to be “too good to be true” themselves. But you may not have realized that it’s against the law and could set a marketer up for costly civil suits as well.

Eric Schneiderman, New York’s aggressive attorney general, announced on Monday that 19 search engine optimization (SEO) companies and small businesses had agreed to stop writing fake online reviews — a form of false advertising known as “astroturfing” — and collectively to pay more than $350,000 in penalties. Individual fines ranged from $2,500 to just under $100,000.

Mind you, we are not talking about household brand names here, unless a householder tends to frequent merchants such as A&E Wig Fashions, Inc. d/b/a A&E and NYS Surgery Center; the “well-known laser hair-removal business” Laser Cosmetica and/or Bread and Butter NY, LLC d/b/a La Pomme Nightclub and Events Space, which were among the 19 miscreants cited.

A press release announcing the settlement and justifying the crackdown states “multiple studies conclude that online reviews can make or break companies,” and names several that indicate just how powerful peer reviews in social media can be:

• According to one survey, 90% of consumers say that online reviews influence their buying decisions;
• A highly cited Harvard Business School study from 2011 estimated that a one-star rating increase on Yelp translated to an increase of 5% to 9% in revenue for a restaurant; 
• Cornell researchers have found that a one-star swing in a hotel's online ratings at sites like Travelocity and TripAdvisor is tied to an 11% sway in room rates, on average.  

Alas, the well-done release also points out that Gartner projects that between 10% and 15% of online reviews will be fabrications by next year.

The operation was dubbed “Operation Clean Turf” by, we suspect, the AG’s communications staff and not the investigators in the field who posed as the owner of a Brooklyn yoghurt shop in need of a little “reputation management.” They reached out to the “leading SEO companies in New York” and some of them took the bait, providing rave reviews from freelance writers “from as far away as the Philippines, Bangladesh and Eastern Europe for $1 to $10 per review.”

The settlement with the New York AG evidently has litigators across the nation smacking their lips in glee over the prospects of filing civil suits on behalf of legions of duped consumers. 

“Every state has some version of the statutes New York used,” Fowler White Boggs litigator Kelly H. Kolb tells Pete Bush on Law 360. “What the New York attorney general has done is, perhaps, to have given private lawyers a road map to file suit.” 

Bush writes that “small-fry businesses might not make tasty individual targets for plaintiffs' lawyers, experts said, but — with the behavior appearing rampant — class theories could potentially come into play or other, bigger businesses could be targeted.”

Several writers took Schneiderman to task for focusing his staff’s efforts on what is seen as a rather obvious practice, at least to digerati. In a Village Voice blog, Anna Merlin writes, “we truly hate to be the ones to tell you this, but sometimes people say stuff on the Internet that is ... not true. Take a moment to collect yourselves.”

Larry Seltzer, writing on ZDNet, tips his hat to a piece by J.D. Tuccille on Reason that “questions the worthiness of dedicating meaningful resources to this sort of crime when both violent and property crimes are ticking up over the last year or two...” 

But Schneiderman tells the New York Times’ David Streitfeld that the practice “is even worse than old-fashioned false advertising. When you look at a billboard, you can tell it’s a paid advertisement — but on Yelp or Citysearch, you assume you’re reading authentic consumer opinions...”

The power of social media campaigns to effectively and efficiently influence consumers was affirmed by Mondelez yesterday. It announced a new initiative called “Storytelling at Scale” that “aims to help the company’s marketers reach potential customers who are not yet fans of their brand pages through a mix of curated content and paid-media,” according to a story by Sebastian Joseph in Marketing Week.  

A trial run of the strategy around Crème Egg’s “Have a Fling” campaign “drove the same purchase consideration shift through Facebook as TV, for a third less,” according to the story. The social media campaign reportedly reached more than 90% of the 18-24 target audience in the U.K., nine times each on average.

Sonia Carter, head of European digital marketing and social media at Mondelez, calls the approach a “‘gamechanger’ in the way it proves the effectiveness of social media to be a mass marketing channel and drive sales,” Joseph writes.

So curate away. Just remember, you just can’t make this stuff up.