Local Merchant Reviews: Problem and Opportunity

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Not long ago, I wrote about how the lack of good local search results—results that could tell me which locksmiths were local and licensed, which ones were bogus—ended in a confrontation with a thuggish fly-by-night dude and a call to the cops. Well, the more I dig into the local listings and ratings business, the more evidence I see that  that the information they provide is so easily rigged or faked, there’s no way I can trust them.

This is hardly news as fraud allegations have dogged user-generated review sites for years. But it spotlights a hazard that review sites are failing to address—and an opportunity they’re missing.

Case in point: We recently needed to take a cab to the airport, so I checked Yelp for companies. One cab company, which we had used before, had six or seven one-star reviews. The complaints were suspiciously similar—all telling a tale of woe about a no-show taxi. That contrasted 100% with our experience. Our driver had been courteous and prompt, if slightly off-beat. (But hey, you gotta be a little off-beat to drive a cab, right?)

As I sifted through cab company ratings, I came across many that seemed blatantly fake yet had slipped through Yelp’s filtering system. In some instances, really bad reviews also included—coincidentally!—link to another limousine company. And this was happening despite the presence of sophisticated filters. Whatever. The easy manipulation of the system casts doubt on the value of user-generated ratings for little-reviewed businesses like cab companies (as opposed to big hotels or restaurants critiqued by dozens of foodies). User-generated review sites may continue to grow, but while I might check Yelp I am more likely to post a question to Facebook or email friends for recommendations I can trust.

That’s why sites like AirBnB, a marketplace for private vacation rentals, offer a useful paradigm: You can’t rate a property on AirBnB unless you have actually stayed there. I am sure there is some way to restrict Yelp reviews to actual customers—people who have tasted the food or ridden in the cab. It could be as simple as using a product like Bump (which lets people check-in to a terminal in a restaurant using Near Field Communications chips in iPhones and Android phones) paired with cheap wireless readers to verify presence. Or maybe it will relate to a combination of GPS signal and credit card transaction. Privacy issues, of course, could make this tricky, although in more closed communities of users (like Google+) people seem less worried about that.

Whatever the case, unless rampant review fraud is tackled, reviews from these supposedly definitive site will continue to remain second-best substitutes to true word-of-mouth recommendations from people located somewhere in or near your social graph. And that ultimately will prove to be a revenue impediment to these companies—as well as another unpleasant thing that already struggling small business owners need to worry about.

Alex Salkever’s Personal Fight column appears every Friday on Street Fight.