Playing Dirty: Analysing ‘Astroturfing’ and its Defiance of the Antitrust Laws

[By Tejaswini Kaushal]

The author is a student at Dr. Ram Manohar Lohiya National Law University, Lucknow.

 

Introduction

Scott Stratten, the author and founder of UnMarketing, whistle-blowed Bell Canada’s ‘MyBell Mobile’ App’s dirty little secret back in 2014, initiating one of the most intense discussions on the ethical and antitrust aspects of posting fake reviews, also called ‘Astroturfing.’ Flaunting a suspicious five-star review on the Apple AppStore, these reviews appeared to be written by Bell employees themselves. The reviews praised the App as “awesome” and “excellent,” which sharply contrasted with the one and two-star reviews from other users who labeled the App as “shameful.” While the company thoroughly maintained that this incident was an innocent repercussion of their employees’ overenthusiastic effort to promote the App, it does not undo the harm it must have caused to the principles of market competition.

Astroturfing is, unfortunately, more common than consumers might realize. Studies in 2023 estimate that up to 45 percent of all online reviews are falsified. Some companies even offer to create positive fake brand reviews in exchange for a fee. Both consumers and competitors are adversely affected by this deceptive practice since online research and social media now heavily influence purchasing decisions, with people more likely to buy a product if they perceive other consumers’ experiences to be genuinely positive. In a 2023 survey, 93% of users have reported being impacted by online reviews for their buying decisions.

With the increasing digitization and the new-age boom of Artificial Intelligence, the prevalence of astroturfing is going nowhere soon, which compels a thorough analysis of its nature and implication on the Indian market. This article analyzes the development and expansion of astroturfing, the universal proliferation of this phenomenon, and the subsequent response by various legislative frameworks, with a particular focus on Canada. Lastly, it will examine the antitrust outlook in light of existing Indian legal jurisprudence and executive actions on astroturfing to address legislative gaps.

Astroturfing Defined: a Digital Web of Deception

Merriam-Webster defines astroturfing in its original sense: “organized activity that is intended to create a false impression of a widespread, spontaneously arising, grassroots movement in support of or in opposition to something (such as a political policy) but that is in reality initiated and controlled by a concealed group or organization (such as a corporation).Coined by a United States (US) Senator in 1985, astroturfing involves projecting a fabricated image of naturalness to sway public opinion and achieve virality. Originally practiced in the physical world, astroturfing has now found new life online with the help of digital media and new technologies. The cyber equivalent of astroturfing is popularly enjoying the portmanteau ‘cyberturfing.’ It often employs tactics like fake testimonials, paid social media accounts, and the creation of multiple fake personas to appear genuine. It involves various methods, such as company-employed bloggers posting biased product reviews disguised as unbiased ‘customer opinions,’ creating multiple fake personas (“sockpuppets”) on platforms like Reddit to spread a populist idea for a product, using paid social media accounts to promote specific product brands and engaging in pay-for-play deals with independent bloggers for positive coverage in exchange for incentives. Astroturfing’s emergence has brought concepts like 50 Cent parties, online water armies, and crowdturfing to the forefront. The rise of social media, especially Twitter, has facilitated the proliferation of astroturfing, allowing fake profiles and bots to wield significant influence on forums, social networks, and customer platforms to favor a certain brand or propel a certain product. Its use to alter customer reviews adversely impacts the domestic and international commercial markets.

The Expanding Reach of Astroturfing: A Threat to Trust and Competition

Astroturfing has become a powerful and efficient strategy for many organizations, thanks to the broader arena provided by the internet. However, this practice significantly impacts consumers’ behavior and organizations’ reputations, undermining authentic opinions and promoting unfair trade practices.

On the one hand, organizations risk tarnishing their image and authenticity if caught astroturfing, as seen with instances involving Microsoft and Wal-Mart in the US. Microsoft once planned an astroturfing campaign and enlisted the services of a prominent Public Relations firm to execute it. However, the campaign faced a major setback when confidential documents related to the scheme were leaked to a leading Los Angeles newspaper before it commenced. Similarly, Wal-Mart and their PR firm adopted a similar strategy by creating a blog called ‘Working Families for Wal-Mart’ to counter the negative publicity the company had received on the internet. These cases highlight organizations’ risks and consequences when resorting to deceptive online marketing tactics to shape public opinion.

On the other hand, organizations can fall victim to astroturfing when competitors spread false information about them. Astroturfing campaigns often involve spreading defamatory and false content, like fake online reviews. One notable instance is Samsung facing a $350,000 fine in Taiwan for publishing false comments and reviews to promote its products and disparage competitors. Similarly, McDonald’s was penalized in Japan for recruiting 1,000 part-time employees to queue up early, generating buzz for its Quarter Pounder burger launch. It claimed it was for “customer feedback” and “market research.”

Recently, proactiveness has been witnessed from online marketplaces, consumer-hosting platforms, and intermediaries. Major companies like Amazon and Google have been actively combating fake reviews and fraudulent practices in court. Amazon proactively blocked over 200,000,000 suspected fake reviews in 2022. As of May 2023, Amazon has taken legal action against 94 fraudsters in the US, China, and Europe, aiming to combat the issue of fake reviews. In June 2023, Amazon filed four new lawsuits against fraudsters attempting to mislead customers and harm selling partners by facilitating fake reviews. The lawsuit entities, namely, Nice Discount, Littlesmm, MangoCity, and Reddit Marketing Pro, were accused of selling and promoting fake reviews to manipulate product listings on Amazon. Such fraudulent activities are primarily driven by an emerging ‘fake review broker’ industry, where brokers approach customers through websites, social media, and encrypted messaging to solicit fake reviews in exchange for money or incentives.

Similarly, Google filed a lawsuit against Ethan QiQi Hu, accusing him of creating hundreds of fake business listings on its platforms and selling them to real businesses to deceive customers. Hu allegedly used elaborate props during video calls to verify these sham businesses and purchased thousands of fake positive reviews to make them appear legitimate. Google seeks monetary damages and an order to block Hu’s alleged misconduct repressing authentic and transparent online experiences.

Countries like Canada, the United Kingdom, the US, Italy, and the European Union have shown commendable proactiveness in formulating their respective jurisprudence and guidelines concerning astroturfing and its implications on competition law. These regions offer valuable insights that can be compared and juxtaposed with the Indian scenario. The examination of these territories will be taken up in Part II of this article and the proposals for the Indian antitrust regime will be taken up in Part III.

Astroturfing, Antitrust, and the Global Uproar

Canada

Astroturfing, as an unethical practice, may not be explicitly illegal but must not go undetected since it undermines public opinion on products or services, promotes a false sense of genuineness, and can impact consumers and private businesses, raising potential concerns under consumer protection, advertising, and competition laws. While the legal framework regarding these practices is still largely unregulated, recent developments in recognizing and regulating this phenomenon are encouraging.

One major jurisdiction that shows promise is Canada. Canada’s current state of competition law to restrict astroturfing has been highly influenced by the Bell Canada v. Canada (Attorney General) judgment, where the telecommunications giant’s employees were found increasing the ‘MyBell Mobile’ App’s ratings. Hence, the chronology of the Canadian antitrust jurisprudence can be studied in two distinct phases: pre and post-Bell Canada.

Pre-Bell Canada framework

The Canadian Competition Act prohibited and continues to prohibit “false or misleading representations” through both civil and criminal provisions. The civil provision (under paragraph 74.01(1)(a)) applies to making or permitting materially false or misleading representations. Civil violations may result in orders to stop the conduct, publish corrective notices, freeze assets until restitution is paid, and administrative monetary penalties (up to $750,000 in the first instance, and $1,000,000 in subsequent cases for individuals and up to $10,000,000 in the first case and $15,000,000 in subsequent cases for corporations). The criminal provision (under section 52) applies if clear evidence shows ‘knowingly’ or ‘recklessly’ making misleading representations even after consumer complaints. The Bureau is obligated to ensure public interest lies in pursuing the criminal path since penalties for criminal violations can be fines up to $200,000 and/or up to one year in jail for less severe offenses, while indictable offenses can lead to fines and/or up to 14 years in jail. For instance, Bell Canada was fined $1,250,000 for astroturfing. The company was further obligated not to publish false or misleading representations for a 10-year term.

Post-Bell Canada reforms

Post the Bell Canada case, the Canadian Competition Bureau released its first publication addressing astroturfing, namely the Deceptive Marketing Practices Digest (Volume 4), advising disclosure of “material connections” between influencers and companies they endorse. The Bureau also took action against astroturfers and had guidelines for comparative advertising. An industry-level self-regulatory body, Advertising Standards Canada (ASC), was established to enforce the Canadian Code of Advertising Standards, prohibiting unfair disparagement of competitors and unsubstantiated comparative claims, handling consumer and advertiser complaints, and reporting violations to the Competition Bureau. In 2020, the Competition Bureau also released a bulletin urging consumers to report fake online endorsements to gather evidence.

United States (US)

In the US, The Federal Trade Commission (FTC) introduced the Federal Trade Commission and Endorsement Guides 2009, updated in 2018 and latest in 2023, which require disclosure of “material connections” between endorsers and marketers that could impact the evaluation of endorsements. Failure to comply may lead to corrective action under the Federal Trade Commission Act. Furthermore, US-based private players like Amazon are proactively stopping fake reviews. In 2015, Amazon sued four websites to prohibit them from providing falsely good product ratings. Amazon said that these reviews “threaten to undermine the trust that consumers and the vast majority of sellers and manufacturers place in Amazon, thereby tarnishing Amazon’s brand.” Furthermore, in a relatively recent and unique action brought by the FTC, Cure Encapsulations, Inc. and its owner Naftula Jacobowitz (defendants), who paid a third-party website to create and post fabricated reviews of their products on Amazon, were fined a whopping $128,000,000.

European Union (EU)

In 2019, the EU issued Directive 2019/2961 to regulate online reviews. The Directive proposed developing technical methods to assess the reliability of consumer reviews, including verifying whether the reviewer had actually used or purchased the product or service. It also sought to combat fake endorsements and regulate social endorsements, where positive interactions with online content create a misleading appearance of support for related content. Additionally, the E-Commerce Rules 2020, established under the Consumer Protection Act 2019, impose obligations on sellers and inventory-based e-commerce entities to refrain from unfair trade practices and misrepresenting product or service quality in reviews. The Standards further recommend categorizing the roles of review authors and receiving organizations, proposing mechanisms to verify the authenticity of reviewers using automated tools and manual verification processes.

United Kingdom (UK)

The UK’s Competition and Markets Authority (CMA) recently investigated ‘Total SEO & Marketing Ltd’ for posting over 800 fake positive reviews for 86 small businesses from 2014 to 2015, making it cease this practice and remove existing fake reviews. The CMA has warned businesses about the legal consequences of using third parties for fake reviews and issued guidelines on adhering to consumer protection laws regarding online reviews. Subsequently, the UK government announced a package of reforms to protect consumers and tackle online issues, making it illegal to pay for fake reviews and introducing clearer rules for easy opt-out from subscriptions to avid ‘subscription traps.’ CMA will gain new enforcement powers and improved dispute resolution mechanisms, including fines of up to 10% of global turnover for mistreating customers and compensation awards to consumers or up to £300,000 in the case of an individual. The regulator will be authorized to impose fines of up to 5% of a business’s annual global turnover for breaches of undertakings and penalties of up to 1% for concealing evidence or providing false information. For FacebookeBayAmazon, and Google, CMA action and penalty imposition have previously been witnessed. The CMA fined Facebook $70,000,000 for withholding information regarding its Giphy acquisition, which led to a breach of an order, and the CMA further ordered Facebook to reverse the purchase, making it the first major digital acquisition blocked by the CMA. The regulatory reforms further aim to tackle anti-competitive behavior, address tech giants’ “killer acquisitions,” and empower the CMA with broader jurisdiction to gather evidence against cartel-style practices, impose fines for abuses in smaller markets, and review non-competitive mergers. A minor merger safe harbor will be created for small businesses, and closer ties with international partners will be fostered post-Brexit to handle cross-border cases.

The UK government is still considering addressing dark pattern design, while the EU can ban these tactics in the proposed Digital Services Act. The EU has also agreed to reform competition law with the Digital Markets Act. Meanwhile, the UK’s pro-competition reform is pending legislation, and the Digital Markets Unit (DMU) lacks the necessary powers to act against tech giants’ market abuses. Progress on competition reforms has been slow, and the CMA’s investigations into tech giants’ market power await structural remedies empowered by the DMU.

Italy

In a landmark 2018 case, the Criminal Court of Lecce in Italy ruled that writing fake reviews using a false identity is a criminal offense under Italian law. The owner of PromoSalento, a company selling fake review packages to hospitality businesses, was sentenced to nine months in prison and ordered to pay approximately €8,000 in costs and damages. TripAdvisor’s investigation into PromoSalento led to the company’s identification and blocking of over 1,000 attempts to submit fake reviews on the platform to boost revenue. The Italian Court’s recognition of the rising threat of fake reviews and its market impact sets a crucial precedent, enhancing the nation’s ability to combat such cases effectively in the future.

The countries mentioned above have all taken significant steps to recognize and address the issue of astroturfing, employing a range of legal frameworks, fines, and guidelines to combat this deceptive practice effectively. These jurisdictions have shown a firm stance in dealing with astroturfing’s negative impact on public opinion, consumer trust, and fair competition. In contrast, India’s approach to tackling astroturfing seems relatively limited, with no explicit legal provisions dedicated to this phenomenon. As a result, there is a need for an in-depth analysis of India’s current antitrust framework and existing guidelines to ascertain the adequacy of their provisions in addressing astroturfing concerns. Part III of this article will explore proposals and potential measures to strengthen India’s antitrust regime and mitigate the impact of astroturfing on its markets and consumers.

Examining Astroturfing Regulations in India

Looking beyond Consumer Protection and Intellectual Property Rights

In India, astroturfing is primarily analyzed under consumer protection laws, intellectual property protection laws, or other civil law provisions. The former is mainly governed by the Consumer Protection Act, 1986. Section 6 of the Act mandates the Central Consumer Protection Council to promote and safeguard consumers’ rights to be informed about the quality, quantity, potency, purity, price, and standard of goods and services. The Act also addresses ‘unfair trade practices’ (UTPs) under section 2(1)(r), encompassing a wide range of deceptive methods, misrepresentations, and false allurements related to products or services. Redress against such UTPs, including astroturf campaigns, can be sought by consumers under this Act. However, the Act’s efficiency in tackling astroturfing remains to be tested.

Furthermore, it was popularly expressed in 2020 that new guidelines or legislation are needed to address astroturfing more effectively. In a proactive response, the Bureau of Indian Standards (BIS) introduced the Indian Standards (IS) 19000:2022 in November 2022, titled “Online Consumer Reviews- Principles and Requirements for their Collection, Moderation, and Publication.” The Standards aim to regulate online reviews, requiring designated Review Administrators to collect reviews transparently, minimize biased and fraudulent reviews, moderate review content, and publish reviews accurately. They require that the review content be limited to personal experiences and that industry-specific terms and conditions apply. The interaction between stakeholders is encouraged, with consumers allowed to flag problematic reviews. While the standards ail from their own issues, including lack of qualifications for Review Administrators and data privacy concerns arising from verification processes, they are a topic for a different discussion.

Furthermore, private businesses and organizations face civil actions for publishing untruthful, damaging, or intellectual property-infringing statements through astroturfing. Criminal defamation lawsuits (under sections 499 and 500 of the Indian Penal Code, 1860) can be undertaken for tarnished reputations, and suits for an injunction and damages may seek to prohibit negative statements affecting trademark, copyright, brand value, and image. Intermediaries, including telecom and internet service providers, could also be subject to legal action under the Information Technology Act, 2000.

Interpolating Astroturfing with the Competition Act

Unfortunately, no Indian case law, legislation, regulation, or circular has yet addressed astroturfing in light of its antitrust nature. However, foreign jurisprudence provides India with the groundwork to build its superstructure upon through borrowed principles and apply to need. India can sufficiently penalize astroturfing using the existing antitrust framework in India as well.

Astroturfing falls under the scope of the Competition Act 2000 to competition law in India, where the involvement of deceptive practices and false advertisements harms competition by misleading consumers to obtain a larger market share or tarnishing a competitor’s market image. By manipulating public perception and stifling competition, astroturfing leads to unfair competition and market distortions.

While astroturfing itself is not explicitly regulated under the Competition Act 2002, certain aspects fall under its purview. When a company indulges in deceptive advertising or misleading consumers, it may be considered an unfair trade practice under Section 6 of the Competition Act 2002, which prohibits certain deceptive or unfair practices. If a dominant firm engages in astroturfing to undermine potential rivals or discourage new market entrants, it could raise concerns under India’s competition law for abuse of dominance under Section 4. If astroturfing involves collusion between firms to engage in deceptive practices or manipulate the market, it may be classified as an anti-competitive agreement under Section 3, which prohibits agreements that cause or are likely to cause an appreciable adverse effect on competition in India.

The Shortcomings in the Indian Antitrust Framework

The BIS guidelines, beyond doubt, have been a critical step in stopping the astroturfing phenomena, regardless of primarily focusing on consumer protection over market regulation. India is leading globally by setting a standard instead of merely making rules or legal provisions. Initially, the guidelines will be voluntary for all e-commerce platforms, with BIS developing a Conformity Assessment Scheme to assess compliance. Violating the standards will be considered an unfair trade practice or a violation of consumer rights given the persisting circumstance, and consumers can report grievances to relevant authorities.

As e-commerce relies on product descriptions, and honest reviews are crucial in influencing purchase decisions, there are immense expectations for improvement from these guidelines. However, uniformly implementing and enforcing them will be a challenge. Some experts argue that voluntary guidelines will not be effective unless e-commerce platforms take strict measures to prevent fake reviews. The issue of consumer distrust stems from paid reviews, but the solution lies beyond marketing. It involves improving product quality, setting realistic expectations, building consumer engagement, and addressing genuine complaints.

Furthermore, balancing the rights of SMEs with those of big Tech firms is another concern. Industry coalitions, allegedly funded by Big Tech, advocate for their interests, which may not truly represent the voices of smaller players. This issue was also recently highlighted in Brussels, with pressure groups raising concerns about well-funded organizations sidelining authentic SME representations in debates.

Considering the Prospects for Progress

Bell Canada exemplifies the Canadian Bureau’s resolute approach to advertising and disclosure concerns in the digital realm, emphasizing their seriousness in tackling such issues, particularly within the online review space. Similarly, the US and other jurisdictions have developed stronger and updated principles and frameworks to tackle astroturfing. Such commitments suggest that globally, the matters of astroturfing will likely continue to be prioritized. India should aim to align itself with the global approach to tackle antitrust issues arising from astroturfing. Addressing the challenges posed by astroturfing requires evolving laws and increased social awareness. The government’s continued efforts to tackle these issues to ensure a fair and transparent e-commerce ecosystem are worth observing. However, effecting meaningful change in addressing these issues requires more than just guidelines and competition law provisions.

For companies, three essential messages must be conveyed and ingrained to ensure awareness and accountability: First, refrain from creating fake reviews internally or through paid operators and dealing with third-party ‘reputation enhancement firms.’ Second, if a company becomes a victim of false reviews posted by a competitor impersonating a customer or encounters post-for-pay schemes, it should promptly report such incidents as per the guidelines, following the example set by Bell Canada. To enable this, the government has to first improve upon and ensure an expedient complaint acknowledgment and redressal mechanism. Thirdly, companies should vigilantly review and update their online social media policies, particularly regarding employee blogging and postings, if necessary. Companies without social media policies should consider adopting them.

For advertisers, promoting a healthy online review ecosystem has long been crucial. Besides continuing law enforcement actions, imposing appropriate financial penalties is essential to dissuade deceptive reviews and endorsements.

For customers, widespread education about recognizing and dealing with fake reviews must be available. Spreading awareness and providing tips on using reviews responsibly will empower consumers to make informed choices. Similar guidelines should be established for platforms, marketers, and influencers to ensure a unified effort in maintaining review authenticity.

Hence, while astroturfing remains a concerning practice that undermines the authenticity of online discourse, it becomes imperative for regulators and consumers to become more vigilant and for businesses and platforms to prioritize transparency, ethical marketing practices, and genuine engagement to foster a more trustworthy and credible digital landscape.

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