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What should retailers do when brands post fake reviews?

What should retailers do when brands post fake reviews?

Author: George Anderson 

Source: Retail Wire 

What are retailers to do when they find brand partners are looking to tilt the selling scale in their favor by posting fake positive reviews of their own products online?

Last year, a person claiming to be a former employee of Sunday Riley, a skincare brand sold by Sephora, posted a link on Reddit to a copy of what appeared to be an internal company email. The message, which pointed to the rollout of two products, asked employees to “write at least three reviews” promoting the items. Employees were also instructed to answer negative reviews from consumers with positive ones. “The power of reviews is mighty,” the email read, “people look to what others are saying to persuade them and answer potential questions they may have.” 

When the news first broke that Sunday Riley employees were engaged in writing fake reviews and that the company had acquired a fake VPN account to prevent detection by Sephora, the retailer responded with a statement that it had teams in place to safeguard the customer review process and that it had been in communication with the vendor that had since committed to following the rules.

Sunday Riley, Allure reported, admitted to the fake reviews at the time the news became public through Reddit, although management claimed it had done so for a variety of reasons including to combat competitive brands that posted “negative reviews of products to swing opinion.”

Earlier this week, the Federal Trade Commission issued a press release that it had reached a settlement with Sunday Riley (the company and its founder and CEO) over two charges: “1) making false or misleading claims that the fake reviews reflected the opinions of ordinary users of the products; and 2) deceptively failing to disclose that the reviews were written by Ms. Riley or her employees.” 

While the settlement did not require Sunday Riley to admit any wrongdoing, it did include a commitment to not engage in similar activities in the future.

Two of the five FTC commissioners — Rohit Chopra and Rebecca Kelly Slaughter — disagreed with the “no fault settlement” and issued their own statement.

“Consider the cost-benefit analysis that a firm might undertake in considering whether to engage in review fraud. The potential benefits are substantial: higher ratings, more buzz, better positioning relative to competitors, and higher sales. The direct costs of generating reviews are minimal, certainly far less expensive than traditional advertising,” wrote the commissioners. “The biggest potential cost is if the wrongdoer is caught, but it is likely that the vast majority of fake review fraud goes undetected. Even fake reviews that are detected may simply be removed with no sanction against the creator.” 

DISCUSSION QUESTIONS: What should retailers do when they find a brand they sell has posted fake reviews? Do you think the FTC’s settlement with Sunday Riley is more likely to encourage or discourage brands thinking about posting false reviews online?

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