Sydney Ren's Blog

Yelp, TripAdvisor, and Urbanspoon are online review websites that people resort to when seeking a third opinion. However, to what extent can we trust these reviews, which are posted by complete strangers? Someone once told me they thought 15% of Yelp reviews were fake, which seems ridiculous already.

Companies make money based on the consumers’ perception of the brand. Perception also includes how consumers expect their product or service to be of a particular quality. So it is shocking, but surely not surprising, that some companies have secretly paid for positive reviews, and even negative reviews for competitors. Companies providing false reviews have become more sophisticated and many false reviews now slip through algorithms designed to weed them out. There’s even a term for this practice: astroturfing.

Just this week, 19 businesses were discovered to have provided false reviews in an operation run by the New York Attorney General. The consequences were steep: $350,000+ in penalties for violating false advertising laws. The repercussions dig deeper than just monetary penalties, however. If the practice of false advertising continues to be prevalent on the Internet, consumers will be less likely to trust businesses to deliver what they claim, ruining any good reputation that existed before. Skepticism doesn’t sell.

A consequence worse than losing consumer trust, however, is that false advertising sets up a destructive business environment.  It becomes less about innovating and creating a better product or service for consumers, and more about shouting and claiming to be the best in the world. This kind of business environment isn’t healthy for the economy and doesn’t provide anything for society other than more noise to sift through. Marketing is all about adding value, and false advertising through fake online reviews only takes away value.

Knock-off Coach bags, Nokia cell phones, and even Calvin Klein underwear are all products sold by unauthorized dealers. As journalist Robert Neuwirth points out, many informal economies function openly without paying taxes or formerly registering with the government. Neuwirth’s 15 minute interview on NPR summarizes the informal economy’s role in society:

Reasonably, businesses and governments are concerned by the lack of taxes and regulation associated with the informal economy. However, last November, the Nigerian government banned what they call “street trading” in Lagos, mainly to reduce crime, clean up the streets, and be more environmentally friendly. Is this the right reason to be restricting the informal economy?

The main ethical issue lies in the majority of the population that depends on the informal economy as their only source of income. For average Nigerians, jobs in the formal economy are inaccessible due to societal barriers. In addition, the Nigerian government doesn’t use its vast oil revenues to provide basic services for its people; almost all Nigerians in Lagos depend on the informal economy for basic services like clean drinking water.

Would it be ethical to regulate or restrict an informal sector that is vital to the well-being of citizens? Can government restrict the informal economy if it plans to implement replacement programs?