The Federal Trade Commission announced a settlement Monday with skincare company Sunday Riley, which sells its products at Sephora LVMH, +0.03% , alleging Sunday Riley engaged in “deceptive online marketing tactics.” It claims the cosmetics firm was “misleading consumers by posting fake reviews of the company’s products on a major retailer’s website, at the CEO’s direction, and by failing to disclose that the reviewers were company employees.”
This, the FTC claims, represents “two violations of the FTC Act: 1) making false or misleading claims that the fake reviews reflected the opinions of ordinary users of the products; and 2) deceptively failing to disclose that the reviews were written by Ms. Riley or her employees.” (Riley is the brand’s founder and CEO.) Sunday Riley and Sephora did respond immediately to requests for comment.
Of course, Sunday Riley far from the only company that has allegedly posted fake online reviews.
This matters to consumers, because reviews matter to consumers. Indeed, a study published in Psychological Science finds that if two similar products have the same rating, online shoppers will buy the one with more reviews.
Researchers at the Association for Psychological Science tasked 120 adults who were comparing pairs of phone cases on Amazon AMZN, -0.77% , and found the participants routinely picked the phone case with the most reviews — even if the ratings for both products were low.
The researchers repeated the experiment, following the same design and procedure, and produced similar results. The study concluded that consumers see products with more reviews as being more popular, and they’re more comfortable having what everyone else is having, regardless of quality.
“[When] faced with a choice between two low-scoring products, one with many reviews and one with few, the statistics say we should actually go for the product with few reviews, since there’s more of a chance it’s not really so bad,” wrote researcher Derek Powell of Stanford University, lead author of the report. In other words, when there’s only a handful of reviews, a few bad ones break the curve and bring down the overall rating.
“But participants in our studies did just the opposite: They went for the more popular product, despite the fact that they should’ve been even more certain it was of low quality,” he wrote.
Matt Moog, CEO of PowerReviews, previously conducted a study with Northwestern University that drew from an even larger data pool of 400 million consumers, which also found that the more reviews there are of a product, the more likely it is that a customer will purchase that product. “Around 20 [and running up to 50] is the optimal number of reviews for a product to have to give consumers the confidence that this product has been tried enough by enough people,” he told MarketWatch.
He has also found that customers who read reviews often click the bad ones first. “They want to read what’s the worst thing people have to say about this,” he said. “That gives them confidence that either the problems people are experiencing are not related to what their buying criteria is, or they can read it and see they may not want to buy this product.”
Most online shoppers (97% to be exact) say reviews influence their buying decisions, according to Fan & Fuel Digital Marketing Group, which also found that 92% of consumers will hesitate to buy something if it has no customer reviews at all.
And 73% of shoppers say written reviews make more of an impression on them than the star or number ratings, according to Deloitte.
So why are we taking the words of complete strangers? Mandy Yoh from ReviewTrackers, which helps businesses keep tabs on their customer reviews, told MarketWatch that these Yelp, Amazon and TripAdvisor reviews have become our new social proof, or the scientific term for when people look at what other people are doing to see how they should behave.
“We have found that online reviews are the second most-trusted source when someone is buying a product or trying a restaurant, and that’s only second to family or friends,” said Yoh, citing a YouGov report.
ReviewTrackers also surveyed consumers about their “shopping journey” to see what influenced their purchasing decisions, and found that across industries including looking for restaurants, choosing a bank, buying a car or picking a doctor, customers are more influenced by fellow customers’ reviews across the board than they are by television ads or social media marketing.
“People are more likely to trust a complete stranger because they see that reviewer as a peer, like they’re in it together,” suggested Yoh. “People don’t trust online brands as much.”
The exception to that rule is if every one of the reviews is giving this place or product five stars. “If the rating is unusually high, that actually can have a negative impact,” said Moog, as shoppers suspect this is too good to be true. “What we have from our data is that the optimal rating is about 4.4 stars.”
This story was updated on Oct. 22, 2019.