Leveraging Social Media to Buy Fake Reviews

We study the market for fake product reviews on Amazon.com. Reviews are purchased in large private groups on Facebook and other sites. We hand collect data on these markets and then collect a panel of data on these products' ratings and reviews on Amazon, as well as their sales rank, advertising, and pricing policies. We find that a wide array of products purchase fake reviews, including products with many reviews and high average ratings. Buying fake reviews on Facebook is associated with a significant but short-term increase in average rating and number of reviews. We exploit a sharp but temporary policy shift by Amazon to show that rating manipulation has a large causal effect on sales. Finally, we examine whether rating manipulation harms consumers or whether it is mainly used by high-quality in a manner like advertising or by new products trying to solve the cold-start problem. We find that after firms stop buying fake reviews, their average ratings fall and the share of one-star reviews increases significantly, particularly for young products, indicating rating manipulation is mostly used by low-quality products.