The Negative Impact of Fake Reviews on Businesses

The introduction this April of the Digital Markets, Competition and Consumers Act has, rightly, seen a significant focus in the property industry on the provision of Material Information but there are other consumer protection areas where the Competition and Markets Authority (CMA) are focusing their attention.

In an era where consumers increasingly rely on online reviews to guide purchasing decisions, the temptation to manipulate ratings through fake reviews can seem like a quick fix for businesses seeking an edge.

Indeed, many of those reading this article will cite knowledge of competitors (it’s never themselves!) posting fake reviews, often when launching a new office or service.

However, the long-term consequences of this deceptive practice far outweigh any short-term benefits. Fake reviews undermine trust, damage reputation, and can even lead to legal consequences, ultimately harming the very businesses they aim to promote.

Erosion of consumer trust

Trust is the foundation of any successful business, and fake reviews erode this trust.

When customers discover that a company has been inflating its ratings or fabricating testimonials, confidence in the brand diminishes. Research has shown that consumers are highly sceptical of overly positive or repetitive reviews, and once they suspect manipulation, they are likely to avoid that brand altogether.

Genuine customer feedback fosters credibility, while dishonest practices drive potential customers elsewhere.

Damage to brand reputation

Reputation is everything, particularly in the digital marketplace.

A business caught engaging in deceptive review practices can suffer lasting harm to its brand image. Negative publicity, social media backlash, and word-of-mouth criticism can spread quickly, tarnishing the company’s credibility.

Competitors and watchdog organisations may also expose unethical behaviour, further damaging the brand’s standing in the industry. Once credibility is lost, rebuilding consumer confidence is a daunting task.

Legal and financial consequences

Authorities worldwide are cracking down on fraudulent review practices. The UK’s Competition and Markets Authority (CMA) have imposed heavy fines on businesses caught manipulating reviews and, under the new Digital Markets, Competition and Consumers Act legislation, fake reviews are specifically highlighted as an unfair commercial practice.

Additionally, platforms like Amazon and Google actively identify and remove fake reviews, sometimes banning businesses that violate their policies. Beyond legal repercussions, companies risk losing potential customers who may perceive their actions as dishonest and exploitative.

Long-term business impact

Fake reviews create unrealistic expectations. When customers experience a product or service that doesn’t live up to its falsely inflated reputation, they are more likely to leave genuine negative reviews, further harming the business. Authentic feedback helps businesses improve products and services, fostering long-term growth. By contrast, reliance on fake reviews often stifles necessary business and service improvements and can lead to further customer dissatisfaction.

Conclusion

While fake reviews may seem like an easy way to gain traction in competitive markets, they pose significant risks. Trust, reputation, legal standing, and long-term business health all suffer when companies resort to deceptive practices.

Instead, businesses should focus on genuine customer satisfaction and transparency, encouraging genuine feedback and reviews as true success stems from honesty, not manipulation.

Michael S Day is managing director at Integra Property Services