Academic journal article Law and Contemporary Problems

Addressing the Commercialization of Business Reputation

Academic journal article Law and Contemporary Problems

Addressing the Commercialization of Business Reputation

Article excerpt

I INTRODUCTION

Beginning in the late 1990s, online mediated reputation systems (MRS), (1) such as Yelp and Angie's List, changed the consumer decisionmaking process in marked ways, making inroads into how consumers buy products, travel, dine, and choose plumbers and electricians. MRS platforms draw in consumer users to generate reviews of their experiences, which the MRS then aggregates and presents in various forms to consumers who seek information about a business or offering.

The impression made by the MRS presentation of reviews to consumers, however, reflects not only the raw inputs from consumer reviewers, but also the impact of the MRS revenue model. Businesses under review can pay for the opportunity to influence what consumers see when they seek MRS information. MRS advertising sales, promotional assistance, and reputation-management services, for example, all enable businesses to use the MRS platform to alter transactional behavior in favor of their business. The monetization of the MRS platform requires the platforms to present information differently than they would if they were only motivated by the purity of consumer education and information sharing.

This article explores the ramifications of this apparent conflict for consumers and offers possible avenues for improvement and preservation of the valuable information offered through the MRS channel.

The proliferation of MRS platforms unquestionably changed consumer information-gathering habits, (2) just as the electronic retail channel acquired impressive scale. (3) Online consumer MRS platforms have transformed consumer shopping habits by establishing entirely new digital venues for shoppers to acquire and absorb data--such as peer experiences and opinions--about businesses and offerings.

If this unique, fairly new data flow has exceptional social value, then preservation of the volume and integrity of this data through scrutiny of the context of its presentation should take higher priority than other recently-identified advertising enforcement concerns. (4) The practices that surfaced during recent class action litigation involving Angie's List should urge more scrutiny of this information exchange. As part of a 2016 settlement, Angie's List agreed to change disclosure practices related to advertising practices on its site. (5) The plaintiffs alleged that Angie's List failed to disclose to paid subscribers that it received payments from service providers for advertising--and that these payments affected provider ratings, review content, review availability, and site placement. (6) In addition to changing these business practices, Angie's List agreed to pay the class $1.4 million (7) as it transitioned away from a subscription-reliant model.

Were Angie's List's disclosure problems the product of inherent tension between the cultivation of a user community and advertisers? Should this tension warrant extra industrywide scrutiny of MRS business practices, including advertising placement practices? If pervasive, such integrity issues warrant investigation and correction to preserve the quality of this important information source.

These corrections may involve, for example, disclosure of revenue sourcing or potential conflicts--at a level more exacting than the regulatory guidelines to advertisers for avoiding engagement in deceptive practices. (8) The Federal Trade Commission's (FTC) recent Enforcement Policy Statement on Deceptively Formatted Advertisements focuses on mandating disclosure that helps the consumer distinguish advertising and promotions from surrounding noncommercial content. (9) For MRS platforms, the unique tensions in the operating model may warrant especially higher standards for distinguishing noncommercial content--or more frequent and focused enforcement. Like all advertising regulation, such interventions should be weighed against the real risk that intervention might impede the overall flow of information. …

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