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J Consum Policy (2013) 36:139157 DOI 10.1007/s10603-012-9216-7
ORIGINAL PAPER
Justin Malbon
Received: 13 September 2011 /Accepted: 27 November 2012 / Published online: 23 January 2013# Springer Science+Business Media New York 2013
Abstract Evidence discussed in this article indicates that consumers rely heavily upon consumer reviews when making decisions about which products and services to purchase online. Sellers and their marketeers are aware of this, and as a result, some of them succumb to the temptation to generate fake consumer reviews. This article argues that policymakers and regulators need to take fake reviews seriously. This is because they undermine a (potentially) effective and efficient mechanism for overcoming information asymmetry between online sellers and buyers. Consumer reviews also offer a powerful mechanism for regulating the marketplace. Sellers who sell sub-standard products or engage in sub-standard selling practices risk reputational damage. Genuine consumer reviews can therefore moderate bad seller behaviour and assist in improving the quality and efficiency of the marketplace. Although there are laws in many jurisdictions that prohibit misleading and deceptive conduct, detecting fake reviews is complex and difficult. This article proposes that one way of increasing the effectiveness of regulatory oversight is for regulators to add an alliance approach to their existing arsenal of regulatory systems and mechanisms.
Keywords Internet or online consumer market . Consumer reviews . Information asymmetry . Regulatory systems . Consumer protection
The genesis of this article was the authors curiosity about whether consumers use strategies to protect them from being ripped off when buying products and services online, and if so what those strategies are. There are a range of risks attenuating online purchasing. Consumers can just as easily buy products from sellers within their jurisdiction as from those outside. Purchasing outside jurisdiction is particularly risky because of the considerable difficulties a consumer faces in enforcing their legal rights. Other risks include purchasing goods that do not arrive, or receiving unwanted or defective goods. Physical
J. Malbon (*)
Law School, Monash University, Clayton 3800, Australia e-mail: [email protected]
Taking Fake Online Consumer Reviews Seriously
140 J. Malbon
products such as clothing, shoes, and furniture cannot be physically examined or tried on before purchase, unless the online seller offers a no-cost or low-cost returns policy (Chu et al. 2005, p. 116). Even...