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Why Amazon is suing the heads of 10,000 Facebook groups instead of Meta

·Technology Editor
·4 min read
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Amazon (AMZN) has been fighting fake reviews on its e-commerce platform for years, and now it’s taking the battle to court. On Tuesday, the tech giant announced that it has filed a lawsuit against the administrators of some 10,000 Facebook groups it claims are dedicated to fake review scams.

The move is meant to tamp down on fake review brokers and the individuals who participate in such schemes. The reason for such a concerted effort? Protecting both consumers who purchase products based on fake reviews, and Amazon’s own reputation while it’s at it.

After all, if customers end up buying faulty or otherwise terrible products based on Amazon’s users reviews, those same customers will gradually lose trust in the company. And that could dent its bottom line.

You may ask yourself, if companies like Facebook-parent Meta (META) are hosting sites where scammers are recruiting people to post fake reviews, why isn’t Amazon just going after Meta?

The answer is the often controversial internet law called Section 230 of the Communications Decency Act. The law allows internet companies like Facebook to host third-party content without being held responsible for the content itself. So if someone runs a group about fake reviews, Amazon can only go after the person running the group, not Meta.

FILE - In this April 17, 2019, file photo online customer reviews for a product are displayed on a computer in New York. Amazon has filed a lawsuit against administrators of more than 10,000 Facebook groups it accuses of coordinating fake reviews in exchange for money or free products. The Seattle-based e-commerce giant said in a statement Tuesday, July 19, 2022 the Facebook groups were set up to recruit people “willing to post incentivized and misleading reviews” across its stores in the U.S. the UK, Germany, France, Italy, Spain and Japan. (AP Photo/Jenny Kane, File)
Amazon is going after fraudsters who sell fake user reviews on its ecommerce sites. (AP Photo/Jenny Kane, File)

Of course, Section 230 also allows Amazon to host its own user product reviews without being held liable for what those users write. The law also ensures that internet platforms can moderate objectionable content.

In other words, Section 230 is a positive and negative for Amazon in that it lets users post reviews of products, while simultaneously protecting third-party sites where scammers collaborate and scheme about fake reviews.

Amazon says it has reported 10,000 fake review groups to Meta, and that the Facebook parent has taken down about half of those. Meta is continuing to investigate other groups, Amazon says.

Fake reviews are a problem for both Amazon and its users

While Amazon can’t go after Facebook parent Meta, its legal blitz against thousands of moderators is meant to do two things: safeguard users and Amazon’s brand, and send a message to other fake reviewers that the company will quash any effort to post such reviews by any means necessary.

According to Amazon, the move impacts reviews posted on Amazon’s stores in the U.S., U.K. Germany, France, Italy, Spain, and Japan. Products range from car stereos to tripods, and at least one of the Facebook groups had as many as 43,000 members.

Fake reviews can be lucrative for both sellers and review brokers. Sellers who participate in such schemes get their products at the top of the User Reviews section of Amazon, pushing legitimate products with slightly lower reviews down, while brokers bring in cold hard cash for their services.

“The retailers obviously want reviews. I mean whether it's fake, or not fake, they want reviews,” explained University of Illinois Chicago computer science professor Bing Liu.

Sellers looking for fake reviews often reach out to brokers who say they can bring in fraudulent reviews for the products for a fee. Those brokers then find people who order the sellers’ product and, after a few days, write a 5-star review. The broker then reimburses the seller for the product, sometimes giving them extra cash.

If you’re like me, you use Amazon’s user reviews to figure out what kinds of products to purchase. I, for instance, just used the feature to buy new gym mats and a surge protector. When user reviews are skewed in favor of shoddy products that sellers boost via review brokers, however, average customers like you and me get left with garbage products — and a healthy distrust of Amazon.

And for a company like Amazon that puts so much work into pleasing customers that it’s willing to cut into its own margins, that kind of poor user experience can cause Prime members to ditch their subscriptions or even leave Amazon behind entirely in favor of rivals like Walmart or Target.

To that end, Amazon says that it has 12,000 employees specifically working to kill fake reviews. And since 2020, the company says it has stopped more than 200 million fake reviews. Still, fraudsters will always find a way to get around Amazon’s controls.

“It's basically a tug of war. It's sort of an arms race,” Liu said. “You have algorithms to catch people doing something and then they find something else to evade your algorithm.”

Amazon’s attack on phony reviews comes as the company’s sales slow following a period of explosive growth during the pandemic. Customers who needed goods unavailable in stores at the time turned to Amazon for everything from hand sanitizer to toilet paper.

Since then, however, growth has pulled back, with net sales in Q1 2022 rising just 7% compared to 44% in Q1 2021. Amazon’s stock price is down 29% year-to-date.

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Got a tip? Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.

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