WRITTEN BY SONAM KUMARI
Course- “BBA.LLB”
BATCH-2024-29
SYMBIOSIS INTERNATIONAL DEEMED UNIVERSITY
SYMBIOSIS LAW SCHOOL, NOIDA
KEYWORDS
- “Indian Contract Act, 1872”
- “Consumer Protection Act,2019”
- “Sales of Good Act, 1930”
- “Specific relief act, 1963(Amending act 2018)”
- Bureau of Indian Standards (BIS)
- Terms of Services(ToS)
- “Consumer Protection (E-Commerce) Rules, 2020”
ABSTRACT
This study anchors the analysis of fake review in India and its regulatory framework, dissecting key legislations such as Indian Contract Act, 1872, which criminalizes fraudulent inducement (Section 17) and empowers deceived buyers to void contracts (section 19). Similarly, the Consumer Protection Act, 2019 mandates transparency, penalizing sellers and platforms that engage in “unfair trade practices,” including fake reviews. The Sale of Goods Act, 1930 further shields consumers by enforcing quality guarantees, allowing claims for the damages which are incurred when products fail to meet the advertised standards. Technological solutions tools can detect fraudulent reviews through linguistic pattern and behavioural anomaly analysis, but continue to be thwarted by fraudsters’ adapting strategies.
INTRODUCTION
Consumer is an individual who has interacted with a product, service, or business through purchase, usage, or other forms of experience, and whose evaluations (reviews or ratings) contribute to the information available to other potential customers
Fake reviews significantly affect both contracts between e-commerce platforms and sellers, as well as consumer trust and protection. From contractual perspective, sellers agree to the terms and conditions of the platform like Amazon, Flipkart, Shoshy etc. These terms of services require sellers to show honest and truthful representation of their products and prohibits any misrepresentation and manipulative practices like fake reviews, which is widely practiced by some of the sellers by collaborating with intermediaries. These intermediaries are called “marketing agencies” where it works like a bridge between sellers and a network of fake reviews. Sellers who want to improve their products partnered with these market agencies that organize networks of fake reviewers. These reviewers purchase products through the affiliate links and post positive but dishonest reviews with proof in the form of (screenshots, review and URLs) about the products in exchange of full or partial refunds and sometimes added commission as incentives. It also includes “Empty box” deals- a kind of deceptive practice linked to fake reviews schemes, where reviewers receive empty packages instead of actual products and give a positive review falsely. Here, the main goal is to generate fake positive reviews to boost product’s rating and sales without the cost of sending the actual products. Since shipping an empty box is cheaper than sending products. Through this scammer saves money while still creating the illusion of verified purchases. These coordinated schemes inflate product ratings artificially, giving dishonest sellers and unfair advantages over honest competitors who rely on genuine customer feedback. When sellers violate the terms of service agreements with e-commerce platforms by engaging in fake review schemes, they face serious consequences designed to protect the integrity of the marketplace and consumers. These penalties include account suspension, financial liability and potential legal action by the platforms.
RESEARCH METHODOLOGY
Secondary research is mainly utilized for this research paper to procure relevant data and information. This is a low-cost and timely method, with the researcher gaining the advantage of developing on given knowledge without gathering primary data.
Literature review was carried out with the help of different secondary sources like scholarly journals, research papers, books, and government reports. The sources helped in gaining thorough understanding and theoretical concepts pertaining to the research focus. Peer- reviewed journals and articles helped in assuring the reliability and validity of the data,whereas books provided core knowledge. Government documents and official reports offered real data and facts pertaining to the research. The literature gathered was subjected to critical analysis in order to determine gaps, trends, and major findings, which assisted in the formulation of the research goals and approach. This facilitated an in-depth understanding of the topic and aided in the formulation of well-informed conclusions.
ANALYSIS
Fake E-Commerce Reviews : The How and The Why
The Rise of Fake reviews
Many articles highlight the growing problem of fake reviews, driven by technological advancements and the increasing dependency on online reviews for consumer decisions. Rapid technological development enables the creation of artificial outputs, such as deepfakes for fake reviews and the marketplace involved around these artificial outputs, related to fake creation, detection and mitigation.
Online reviews are the major influencer in consumer’s purchase decisions. In the United States, more than 80% of consumers rely on online reviews before purchasing any products. According to a 2023 Statista survey, 92% of Indian consumers use online reviews before making a purchase. This highlights that a vast number of buyers actively seek out and rely on online reviews as a form of social proof before committing to the products and services.
It is the one of the most influential factors affecting consumer’s buying behavior, which creates strong incentives for fraudulent actors to manipulate them. It happens mainly through two channels: Misinformation and Mistrust. Misinformation is directly decept the consumers by making fake positive reviews on the products that have low-quality or unsuitable products. In the influence of a high rating and trustworthy product, customers get misled and end up purchasing those products they might otherwise avoid. Much experimental evidence shows that on the exposure of fake positive reviews customers are more likely to choose inferior products over superior ones, directly harming their welfare and satisfaction. It also inflates perceptions of product quality to reduce the risk of a customer’s anticipation of potential negative outcomes or losses associated with a purchase decision. This deception leads to consumers spending money on the products which do not meet their expectation or needs, resulting in buyer’s remorse and wasted expenditure. Studies estimate that fake reviews can cause substantial cumulative financial losses for consumers. As they got tricked into buying products on manipulated ratings and testimonials.
Whereas Mistrust in erosion of the confidence in the review system, it reduces trust in reviews as consumers become aware of the prevalence of fake reviews, their overall trust in the review system gets diminished. This skepticism leads customers to ignore all the reviews, even genuine ones, making it harder for high quality products to stand out and for consumers to make well informed choices. When consumers lose trust in online reviews often because they suspect that many reviews are fake, they tend to rely less on ratings and review content while making purchase decisions. Reviews are meant to help consumers evaluate the quality, features and suitability of the products. If consumers doubt the authenticity of reviews, they may ignore this value altogether. Without true and reliable reviews,
consumers lack clear guidance on which products best meet their needs. This can lead to choosing products that are less suitable, lower quality, or wastage of money. The loss of trust does not affect only products with fake reviews but also those with genuine, high quality feedback. Consumers may generalize their mistrust across the entire platform, harming honest sellers and reducing overall market efficiency.
Fake reviews generated by individuals that sound like authentic reviews without ever having used the product. They also used text generation algorithms, by processing natural language processors and machine learning, that automate the creation of fake reviews at large scale. These reviews have been traded like commodities in a “market of fakes”.
Fake reviews can influence the product’s ranking either in positive (when the fake reviews is positive) or in negative way (when the fake reviews is negative), it happens because online marketplaces algorithms use reviews as a signal to determine the product’s ranking among other products in the same category. Therefore fake reviews can result in unfair competitions, where product rankings are artificially inflated and deflated. It is essential to detect and curb such effects from taking place in order to protect the consumers and the platforms. The impact of fake reviews is not only cosmetic or reputational but also causes financial losses. According to Luca study 2011, it estimates that a one- star decrease in yelp rating causes a 5- 9% revenue drop, one-star increase similarly results in a 5-9% revenue gain, shows the powerful financial impact of online consumer reviews on business.
Contractual Obligations of Sellers in Dealing with fake E-commerce reviews
E-commerce platforms typically have terms of services(ToS) agreements, that sellers must have to adhere to the rules and regulations. Sellers are contractually obliged to provide accurate and truthful information about the products and prohibit any false or misleading information. This includes reviews that should be genuine and should reflect the actual experiences of the customer. Agreements of ToS explicitly prohibits the sellers to engage in any kind of practices that manipulate the review system, such as creating fake reviews, incentivizing positive reviews, or suppressing negative reviews. Sellers must comply with the policies of the platforms, failure to do so can result in penalties.
Engaging in these fake reviews practices attracts breach of the contractual obligations given in the ToS agreement. E-commerce have the right to take action against sellers who violate the terms that includes, suspension or termination of the account, platform may suspend or terminate the seller’s account, preventing them from indulging in selling products on the platform. The platform may remove such fake reviews associated with the seller’s products. They may impose financial penalties or withhold payments of the seller to compensate for damages caused to the customers by the fake reviews. In severe cases, the platform may pursue legal action for breach of contract, seeking damages, injunctions, or other remedies to prevent future violations.
Remedies available to buyers
Buyers can seek remedies against fake reviews under “Indian Contract Act, 1872,” “Consumer Protect Act, 2019”, and “Sales of Goods Act, 1930”. Remedies available are given in the following:-
- “Section 17 of the Indian Contract Act, 1872” defines fraud as any act committed with the intent to deceive or induce another party into a contract, including false statements, active concealment, promises made without intention to perform, or any deceptive act or omission declared fraudulent by law. Where a contract is induced by such fraud (e.g., false reviews that give a false impression of a product’s quality), the contract is voidable at the choice of the party who has been defrauded under Section 19.
- The party aggrieved can go behind the contract and claim damages for any losses.Sequel to “Section 73 and Section 74 of the Contract Act” are sections which deal with compensation: Section 73 permits the party who is injured to recover compensation for loss or harm resulting from the breach, and Section 74 gives compensation in the event of stipulated penalty or liquidated damages under the contract. Under the Sale of Goods Act, 1930, Sections 14, 15, and 16 provide that goods shall be as described, of merchantable quality, and fit for the purpose described. Section 16(1) deals specifically with implied conditions as to quality or fitness, and Section 59 enables the buyer to recover damages if goods fail to meet these standards as represented, e.g., where false reviews lead to false expectations.
- The party aggrieved can go behind the contract and claim damages for any losses. “Section 73 and Section 74 of the Contract Act” are sections which deal with compensation: Section 73 permits the party who is injured to recover compensation for loss or harm resulting from the breach, and Section 74 gives compensation in the event of stipulated penalty or liquidated damages under the contract.
- Under “the Sale of Goods Act, 1930”, Sections 14, 15, and 16 provide that goods shall be as described, of merchantable quality, and fit for the purpose described. Section 16(1) deals specifically with implied conditions as to quality or fitness, and Section 59 enables the buyer to recover damages if goods fail to meet these standards as represented, e.g., where false reviews lead to false expectations.
- Under “Consumer Protection Act 2019”; Section 2(5) talks about a consumer, registered voluntary consumer association, or Central/State Government is defined as “complainant.” These can lodge complaints under the Act. In case of defective goods or unfair trade practice, a complaint can ask for replacement, refund, or compensation.
Section 2(7): Where “consumer” means a person who buys any goods or services for consideration and includes users by the buyer’s permission. Except resale/commercial use, except for self-employment. They can lodge complaints for faulty goods/services and recover remedies such as replacement, refund, or compensation.
Section 2(16): Means “e-commerce” as purchase or sale of goods/services, including digital items, over digital networks. Consumers who lose due to e-commerce can lodge grievances. Relief takes the form of replacement, refund, or compensation. Consumer interests are safeguarded by the E-Commerce Rules, 2020.
Section 2(46): Describes “unfair contract” as one with terms substantially deviating from consumer rights, e.g., punitive penalties or restricting liability. Impacted consumers can complain and claim remedies such as declaration of nullity of the contract or compensation for losses.
Section 2(47): Describes “unfair trade practice” as misrepresentation, false promises, stockpiling, and failure to give bills. Deceived consumers can complain and can recover refunds, compensation, or action to rectify the situation.
- “The Specific Relief Act, 1963” (amended 2018), Section 10 provides for the specific performance of a contract in specified situations, particularly where monetary damages are insufficient. Where a buyer is deceived into a contract by fraud (Section 17), and the product does not match agreed standards (Sale of Goods Act), the buyer can claim rescission and damages, and in certain situations, specific performance under Section 10 where fit. Therefore, intentional deception by means of false reviews may amount to fraud, triggering remedies of rescission, damages, and, where appropriate, specific performance .
REAL WORLD CHALLENGES IN IMPLEMENTING SUCH MEASURES
One significant challenge stems from the rapid pace of technological innovation and development in e-commerce. Businesses may find it difficult to keep up with the necessary technical, design, and business process skills to create an effective and secure online environment. Furthermore, integrating existing databases and transaction processing software with new e-commerce enabling software can also present a challenge for businesses transitioning online. The global and borderless nature of e-commerce introduces further complexities. Counterfeiters and illicit trade networks exploit online platforms, and due to the vast landscape with millions of sellers, detection and enforcement become exceedingly difficult. Criminal networks adapt quickly to circumvent law enforcement, requiring constant re- examination of government and industry responses. The screening of cross-border movements of counterfeits, often shipped in small parcels, poses a significant logistical hurdle.
Combating fake reviews, a major issue affecting consumer trust, presents its own set of challenges. Fake reviews can be generated at scale using AI tools, and humans often struggle to distinguish them from genuine reviews. Spammers adapt their tactics once detection methods become known. Moreover, the lack of reliable data and the multilingual nature of online reviews complicate the development of effective detection mechanisms. Moreover, the diverse landscape of e-commerce platforms, ranging from major players to many smaller ones, makes it difficult to implement uniform anti-counterfeiting measures. While larger platforms are developing mechanisms, smaller platforms may lack the resources. The lack of uniform approaches among platforms regarding anti-counterfeiting mechanisms can also be burdensome for rights holders.
Finally, effective consumer protection in e-commerce requires stronger information- sharing and collaboration among public and private stakeholders, both within and across jurisdictions, including express delivery carriers, social media, payment processors, and search engines. Addressing privacy concerns while exchanging information on bad actors is another crucial aspect that needs careful consideration.
Suggestions
E-commerce sites need to implement AI systems capable of identifying and deleting appealing fraudulent content disguised as reviews. Such platforms also need to enforce severe consequences for sellers who repeatedly contravene the policies governing reviews.There should be greater attention to incentivized reviews and badges verifying purchases by showing labels on such reviews as marked badges of verified purchases. Initiatives aimed at educating consumers target helping shoppers identify appealingly masqueraded fraudulent reviews by flagging the use of nonspecific overly positive descriptors or other extreme embellishments. Collaborative efforts are crucial in addressing cross-border review fraud syndicates, and platforms need to revise their algorithms to prioritize authentic customer testimonials over ratings given through orchestrated campaigns. Together, these actions, which are technological in nature, educational, regulatory alongside defending consumers, sellers, and online reviews simultaneously will restore tangible credibility.
CONCLUSIONS
The issue of counterfeit reviews in e-commerce has become a serious concern as it erodes consumer trust, damages fair competition, and threatens the ethical practice of online business. As analyzed before, the context problem is the technological weaknesses, lack of sufficient legal policies, and greater economic motives that unduly support such activities.
One single approach is not enough to tackle the problem. Multi-level review verification systems alongside enhanced fraud detection tools are essential investments for the platforms. Strengthening legal policy enforcement with clear compliance requirements is a priority for policymakers. These policies need to be accompanied by digital literacy programs that prepare consumers for empowered decision-making. Sharing intelligence will be critically useful for all countries in fighting e-commerce crime.False reviews can no longer be viewed as just a technical problem or regulatory failure. Online marketplaces need to be governed in a way that maintains credibility. With consumer education, proactive governance, and advanced technology, a trust-centric e-commerce environment can be created where both commerce and consumers thrive in the long term.
REFERENCES
- “The Indian Contract Act, No. 9 of 1872, § 17, INDIA CODE (1872).”
- “The Sale of Goods Act, No. 3 of 1930, § 16, INDIA CODE (1930).”
- “The Consumer Protection Act, No. 35 of 2019, § 2(7), INDIA CODE (2019).”
- “The Specific Relief Act, No. 47 of 1963, § 10, INDIA CODE (2018).”
- “Consumer Protection (E-Commerce) Rules, 2020, MINISTRY OF CONSUMER AFFAIRS, GAZETTE OF INDIA, Notification No. G.S.R. 462(E) (July 23, 2020).”
- “Luca, Michael, Reviews, Reputation, and Revenue: The Case of Yelp.com, 49 HARV. BUS. SCH. WORKING PAPER (2011), https://heinonline.org/HOL/P?h=hein.journals/harvw49&i=1.”