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19 companies fined $350,000 for fake online reviews

After a lengthy investigation, one state has cracked down on fake online reviews, particularly on Yelp, fining nearly 20 companies a total of $350,000. It just got real.

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Fake Yelp reviews cost brands big time

Yelp recently filed a lawsuit against a lone law firm, alleging fake reviews, getting the ball rolling on their taking legal action against companies seeking to boost their profile by faking reviews or buying fake reviews. They’ve been policing the site for some time now and businesses are known for suing each other over defamatory comments, but news out of New York has just made it even costlier for businesses faking reviews.

New York’s Attorney General Eric T. Schneiderman has announced that after a year-long investigation (“Operation Clean Turf”), 19 companies have agreed to pay fines for writing fake reviews on Yelp, totaling $350,000 in penalties.

Because fake reviews are considered astroturfing, wherein a commenter on a website, be it Yelp, a blog, or otherwise, posts commentary acting as a disinterested third party, hiding (aka lying about) their affiliation with the company being defended or positively reviewed. Review sites like Yelp have been tainted with this behavior, by companies themselves and by freelancers hired to write positive reviews and make them look legitimate.

Aside from Yelp cracking down, New York has begun what could become a trend of other states investigating and fining companies that pad their reviews online, not just on Yelp but on Citysearch, Google Local, and others, according to Schneiderman.

In a statement, the AG said, ” In the course of the investigation, the Attorney General’s office found that many of these companies used techniques to hide their identities, such as creating fake online profiles on consumer review websites and paying freelance writers from as far away as the Philippines, Bangladesh and Eastern Europe for $1 to $10 per review. By producing fake reviews, these companies violated multiple state laws against false advertising and engaged in illegal and deceptive business practices.”

Astroturfing is referred to as false advertising by AG

“Consumers rely on reviews from their peers to make daily purchasing decisions on anything from food and clothing to recreation and sightseeing,” Schneiderman noted. “This investigation into large-scale, intentional deceit across the Internet tells us that we should approach online reviews with caution. And companies that continue to engage in these practices should take note: ‘Astroturfing’ is the 21st century’s version of false advertising, and prosecutors have many tools at their disposal to put an end to it.”

As a result of the investigation, the following 19 companies involved have agreed to stop astroturfing and will cough up anywhere from $2,500 to $100,000 each:

  1. A&E Wig Fashions, Inc. d/b/a A&E and NYS Surgery Center
  2. A.H. Dental P.C. d/b/a Platinum Dental
  3. Body Laser Spa Inc.
  4. The Block Group, LLC, d/b/a Laser Cosmetica and LC MedSpa, LLC
  5. Bread and Butter NY, LLC d/b/a La Pomme Nightclub and Events Space
  6. Envision MT Corp.
  7. iSEOiSEO
  8. Medical Message Clinic and HerballYours.com
  9. Metamorphosis Day Spa, Inc.
  10. Outer Beauty, P.C., Lite Touch Plastic Surgery, P.C., Staten Island Special Surgery, P.C., Sans Pareil Surgical, PLLC
  11. Stillwater Media Group
  12. Swan Media Group, Inc. and Scores Media Group, LLC
  13. US Coachways Limousine, Inc. and US Coachways, Inc.
  14. Utilities International, Inc. d/b/a Main Street Host
  15. The Web Empire, LLC
  16. Webtools, LLC and Webtools Internet Solutions Ltd.
  17. West Village Teeth Whitening Service, LLC; Magic Smile, Inc., aka Magic Smile
  18. XVIO, Inc.
  19. Zamdel, Inc. d/b/a eBoxed

How did these companies get away with it in the first place?

These companies didn’t just fool the Yelp system, they manipulated Google Places, Yahoo! Local, Citysearch, Judy’s Book, InsiderPages.com and more. One company posted over 1,500 fake reviews online by masking their IP address so there were no red flags on the review sites’ end.

Another company offered free or discounted services in exchange for positive reviews, while another hired an SEO company to post fake reviews. Another company blatantly solicited freelance writers from Fiverr.com and oDesk.com to write fake reviews, and asked employees to pose as customers and write positive reviews. That same company offered $50 gift certificates to customers willing to write positive reviews without disclosing the gift in the review.

There are many ways to cheat the system, but after years of these abuses, the review sites and law enforcement are getting involved and wising up, costing businesses big time. We hope in the future to see punishments of the very people and review mills generating these fake reviews in mass.

Marti Trewe reports on business and technology news, chasing his passion for helping entrepreneurs and small businesses to stay well informed in the fast paced 140-character world. Marti rarely sleeps and thrives on reader news tips, especially about startups and big moves in leadership.

Social Media

Twitter to start charging users? Here’s what you need to know

(SOCIAL MEDIA) Social media is trending toward the subscription based model, especially as the pandemic pushes ad revenue down. What does this mean for Twitter users?

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Twitter and other social media apps open on a phone being held in a hand. Will they go to a paid option subscription model?

In an attempt to become less dependent on advertising, Twitter Inc. announced that it will be considering developing a subscription product, as well as other paid options. Here’s the scoop:

  • The ideas for paid Twitter that are being tossed around include tipping creators, the ability to pay users you follow for exclusive content, charging for use of the TweetDeck, features like “undo send”, and profile customization options and more.
  • While Twitter has thought about moving towards paid for years, the pandemic has pushed them to do it – plus activist investors want to see accelerated growth.
  • The majority of Twitter’s revenue comes from targeted ads, though Twitter’s ad market is significantly smaller than Facebook and other competitors.
  • The platform’s user base in the U.S. is its most valuable market, and that market is plateauing – essentially, Twitter can’t depend on new American users joining to make money anymore.
  • The company tried user “tips” in the past with its live video service Periscope (RIP), which has now become a popular business model for other companies – and which we will most likely see again with paid Twitter.
  • And yes, they will ALWAYS take a cut of any money being poured into the app, no matter who it’s intended for.

This announcement comes at a time where other social media platforms, such as TikTok and Clubhouse, are also moving towards paid options.

My hot take: Is it important – especially during a pandemic – to make sure that creators are receiving fair compensation for the content that we as users consume? Yes, 100%. Pay people for their work. And in the realm of social media, pictures, memes, and opinions are in fact work. Don’t get it twisted.

Does this shift also symbolize a deviation from the unpaid, egalitarian social media that we’ve all learned to use, consume, and love over the last decade? It sure does.

My irritation stems not from the fact that creators will probably see more return on their work in the future. Or on the principal of free social media for all. It stems from sheer greediness of the social media giants. Facebook, Twitter, and their counterparts are already filthy rich. Like, dumb rich. And guess what: Even though Twitter has been free so far, it’s creators and users alike that have been generating wealth for the company.

So why do they want even more now?

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Social Media

TikTok enters the e-commerce space, ready to compete with Zuckerberg?

(SOCIAL MEDIA) Setting up social media for e-commerce isn’t an uncommon practice, but for TikTok this means the next step competing with Facebook and Instagram.

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Couple taking video with mobile phone, prepared for e-commerce.

Adding e-commerce offerings to social media platforms isn’t anything new. However, TikTok, which is owned by the Chinese firm ByteDance, is rolling out some new e-commerce features that will place the social video app in direct competition with Mark Zuckerberg’s Facebook and Instagram.

According to a Financial Times report, TikTok’s new features will allow the platform to create and expand its e-commerce service in the U.S. The new features will allow TikTok’s popular users to monetize their content. These users will be able to promote and sell products by sharing product links in their content. In return, TikTok will profit from the sales by earning a commission.

Among the features included is “live-streamed” shopping. In this mobile phone shopping channel, users can purchase products by tapping on products during a user’s live demo. Also, TikTok plans on releasing a feature that will allow brands to display their product catalogs.

Currently, Facebook has expanded into the e-commerce space through its Facebook Marketplace. In May 2020, it launched Facebook Shops that allows businesses to turn their Facebook and Instagram stories into online stores.

But, Facebook hasn’t had too much luck in keeping up with the video platform in other areas. In 2018, the social media giant launched Lasso, its short-form video app. But the company’s TikTok clone didn’t last too long. Last year, Facebook said bye-bye to Lasso and shut it down.

Instagram is trying to compete with TikTok by launching Instagram Reels. This feature allows users to share short videos just like TikTok, but the future of Reels isn’t set in stone yet. By the looks of it, videos on Reels are mainly reposts of video content posted on TikTok.

There is no word on when the features will roll out to influencers on TikTok, but according to the Financial Times report, the social media app’s new features have already been viewed by some people.

TikTok has a large audience that continues to grow. By providing monetization tools in its platform, TikTok believes its new tools will put it ahead of Facebook in the e-commerce game, and help maintain that audience.

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Social Media

Your favorite Clubhouse creators can now ask for your financial support

(SOCIAL MEDIA) Clubhouse just secured new funding – what it means for creators and users of the latest quarantine-based social media darling.

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Woman talking on Clubhouse on her iPhone with a big smile.

Clubhouse – the live-voice chat app that has been taking the quarantined world by storm – has recently announced that it has raised new funding in a Series B round, led by Andreessen Horowitz, the venture capital firm in Silicon Valley.

The app confirms that new funding means compensation for creators; much like the influencers on TikTok and YouTube, now Clubhouse creators will be able to utilize features such as subscriptions, tipping, and ticket sales to monetize their content.

To encourage emerging Clubhouse creators and invite new voices, funding round will also support a promising “Creator Grant Program”.

On the surface, Clubhouse is undoubtedly cool. The invite-only, celebrity-filled niche chatrooms feel utopic for any opinionated individual – or anyone that just likes to listen. At its best, Clubhouse brings to mind collaborative campfire chats, heated lecture-hall debates or informative PD sessions. I’ll be the first to admit, I’m actually obsessed.

And now with its new round, the video chatroom app will not only appear cool but also act as a helpful steppingstone to popular and emerging creators alike. “Creators are the lifeblood of Clubhouse,” said Paul & Rohan, the app’s creators, “and we want to make sure that all of the amazing people who host conversations for others are getting recognized for their contributions.”

Helping creators get paid for their labor in 2021 is a cause that we should 100% get behind, especially if we’re consuming their content.

Over the next few months, Clubhouse will be prototyping their tipping, tickets and subscriptions – think a system akin to Patreon, but built directly into the app.

A feature unique to the app – tickets – will offer individuals and organizations the chance to hold formal discussions and events while charging an admission. Elite Clubhouse rooms? I wonder if I can get a Clubhouse press pass.

Additionally, Clubhouse has announced plans for Android development (the app has only been available to Apple users so far). They are also working on moderation policies after a recent controversial chat sparked uproar. To date, the app has been relying heavily on community moderation, the power of which I’ve witnessed countless times whilst in rooms.

So: Is the golden age of Clubhouse – only possible for a short period while everyone was stuck at home and before the app gained real mainstream traction – now over? Or will this new round of funding and subsequent development give the app a new beginning?

For now, I think it’s safe to say that the culture of Clubhouse will certainly be changing – what we don’t know is if the changes will make this cream-of-the-crop app even better, or if it’ll join the ranks of Instagram, Twitter, and Facebook in being another big-time social media staple.

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