Govt to invoke new regulation to combat fake reviews on e-commerce sites

The Union government will invoke an Indian Standards code to tackle fake customer reviews and inflated ratings on e-commerce platforms, a global problem, amid an increase in the number of complaints by online shoppers on the national consumer helpline, according to consumer affairs secretary Nidhi Khare.

Customer reviews and ratings of products and services greatly influence what people buy online. Sellers on e-commerce sites often manipulate ratings and fill them with paid reviews to boost sales.

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“The presence of fake reviews online jeopardises the trustworthiness and credibility of shopping platforms and can cause consumers to make wrong purchase decisions,” said Khare, who chaired a stakeholders’ meeting with representatives of e-commerce platforms, including Amazon and Flipkart on Wednesday.

India’s e-commerce market is estimated at $112.93 billion in 2024 and expected to touch $299.01 billion by 2029, growing at a compound annual growth rate of 21.5% over this period, according to a report by Mordor Intelligence.

The new standard (IS 19000:2022) prescribes specific responsibilities for reviewers and the review administrator. Organisations are required to identify the review author by specific prescribed modes, according to its new requirements.

The number of consumer grievances related to e-commerce on the national consumer helpline has risen from 95,270 in 2018 (22% of total grievances) to 4,44,034 in 2023 (43% of total grievances), according to official data.

E-commerce platforms operating in India will have to develop a written code of practice, which has to be communicated and made available to all management and staff. They will have to demonstrate how this document and the guiding principles will be met and maintained, Khare said.

Globally, platforms, such as Amazon, have long acknowledged the problem. Often sellers use other social media platforms such as Facebook to post inflated reviews. Amazon has in the past said the company analyses 10 million reviews a week to stop the practice with a combination of human moderators and machine-learning tools.

Yet, research shows that the practice is rampant. According to a recent analysis by US-based consulting firm Pattern, an increase of just one star in a rating on Amazon “correlates” with a 26% increase in sales.

In the Indian context, the consumer affairs ministry found that fake reviews affect online customers in the hotel, tours and travel segments as well as the food and beverages the most.

The essential requirements provided under a draft quality control order (QCO) related to the new standard to combat fake reviews include the stipulation that “processes for collecting, moderating and publishing online consumer reviews shall be done in a manner ensuring that the reviews that are genuine get published”.
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