The Market for Fake Reviews
77 Pages Posted: 20 Aug 2020 Last revised: 9 Aug 2021
Date Written: August 6, 2021
We study the market for fake product reviews on Amazon.com. These reviews are purchased in large private internet groups on Facebook and other sites. We hand collect data on these markets to understand what products buy fake reviews and then collect a panel of data on these products' ratings and reviews on Amazon, as well as their sales rank, advertising, and pricing policies. We find that a wide array of products purchase fake reviews, including products with many reviews and high average ratings. Buying fake reviews on Facebook is associated with a significant but short-term increase in average rating and number of reviews. We exploit a sharp but temporary policy shift by Amazon to show that rating manipulation has a large causal effect on sales. Finally, we examine whether rating manipulation harms consumers or whether it is mostly used by high-quality or young products in a manner akin to advertising. We find that after firms stop buying fake reviews, their average ratings fall and the share of one-star reviews increases significantly, particularly for young products, indicating rating manipulation is mostly used by low-quality products and is deceiving and harming consumers.
Keywords: Fake reviews, online platforms, e-commerce, fraud, consumer protection
JEL Classification: L81, L15, L51, K13
Suggested Citation: Suggested Citation