Navigating New Regulations on E-commerce Reviews

As society shifts to a digital-first approach, government regulatory bodies have been struggling to keep up with changes in the way information is disseminated and validated. Earlier this month, we covered the multi-pronged Biden-Harris initiative that seeks to improve digital customer experience in the private sector and includes an accountability clause for “companies that provide bad service.” To understand the impact of the Federal Trade Commission (FTC)’s “Rule on the Use of Consumer Reviews and Testimonials,” we examine the motivations for review generation and the implications of review sentiment.

Reviews can take on a variety of formats and exist all along the spectrum of credibility. The significance of single reviews or an aggregate review rating depends on the product, the website, and the customer’s preferences. Because there is an inherent subjectivity to every aspect of this forum, we would not consider user reviews to be the best way to evaluate an offering. Still, CCW Digital found in a 2023 study that 28% of customers overwhelmingly trust product reviews across the board, and another 57% trust online reviews on specific websites. Online reviews play a crucial role in the e-commerce model and will continue to play an influential role in the buyer’s journey.

One facet of customer sentiment

Reviews represent a vocal minority of users who have both the time and the motivation to write about their experience. Most reviews are written very shortly after purchase, which often means the review only encapsulates a brief experience of the product. Our 2024 consumer preferences study found that 39% of customers write negative reviews as a response to bad experiences, and we can reasonably assume negative experiences are more motivating than positive ones. Sometimes users write negative reviews to reach some kind of resolution, such as a replacement or refund from the company, while others find some solace in warning their fellow consumer about a brand.

It can be challenging to pin down the intent of reviews that were intrinsically motivated. Even the most negative reviews may not represent a customer who has been turned off the brand for good. On the other hand, it may or may not be obvious when companies offer incentives for writing reviews. Honest companies incentivize reviews with a reward, perhaps in the form of a discount code or gift card. Companies with confidence in their offerings can find success in bolstering their credibility through authentic generation of positive reviews. This practice also creates an influx of genuine feedback that will likely be worth the investment.

Even when 100% of a company’s reviews come from real individuals who have experienced their product, it is not guaranteed that the qualms they write about represent all product experiences. If a company seeks to address the subjective problems that are causing the loudest 5% of customers to write negative reviews, and in doing so ignore the more substantive issues that could be affecting the silent 95%, they won't prioritize the right CX improvements. When analyzing reviews, remember that there are biases to take into account, and the customer demographics most likely to write reviews are not necessarily the demographic most likely to purchase your product. 

Review data is complex and often requires some level of empirical analysis. Any negative sentiment, no matter how small or fleeting, may inspire someone to write a negative review. In cases where the reviewer points to an agent or customer service as the pain point of their experience, be sure to determine if the customer truly received bad service or if they simply received an answer they didn’t want to hear.

The issue of fake reviews

The latest FTC rule will crack down on deceptive review practices, with penalties and consequences going into effect as soon as October. Deceptive reviews are broken into four main categories:

• Review suppression: The practice of removing or hiding reviews.
• Insider reviews: Reviews written by leaders within the company that are undisclosed or that otherwise intend to mislead others as being authentic.
• Incentivized reviews: Incentives that are conditional upon the review being positive will be banned. Incentivized reviews in which the company has no influence on the content of the review will continue to be allowed.
• AI in reviews: Any nefarious review creation that leverages AI to quickly generate large numbers of such reviews.

This new ruling will allow the FTC to go after companies engaging in the above practices with hefty fines and other penalties. Leadership of organizations participating in these shady procedures should immediately begin compliance measures to avoid major losses later this year. 

Leveraging authentic user reviews 

Beyond basic compliance with regulation, there are several ways companies can ensure that they’re capitalizing on review content. It is critical that this information is processed into actionable insights and shared with the appropriate departments. Consider these tenets on how to make the most of your reviews:

• Transparency is key: Ensure the review forum is organized transparently, whether the content is positive or negative. When brands only feature wholly positive reviews, it can create skepticism and actually produce the opposite result of what was intended. Customers can, and will, think critically before purchasing a product, and negative feedback can be a helpful part of the customer journey. Give them access to the most up-to-date, transparent feedback to inform their decision.
• Close the loop: Look into how responding to negative reviews might resolve some customers’ issues. Responding to individual reviews will demonstrate that your company is actively listening to feedback and interested in ensuring every experience ends on a positive note.
• Use negative feedback as fuel: Negative feedback also offers a rare look into customer pain points. Using this insight to iterate and improve future interactions can literally turn a negative into a positive. Tools that aggregate key words or detect trends in reviews can help distill huge amounts of text into useful information. With the right tools and analysis, you will be able to identify the root causes of customer dissatisfaction and share that information with relevant teams.
• Learn about your detractors and promoters: It cannot be overstated how immensely valuable the feedback in the review section is. Examine the differences in sentiment on each storefront and review platform your product is featured. These nuances will offer insight into how your buyer’s journey differs across platforms.

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