NEW YORK -- Attorney General Eric T. Schneiderman today announced that 19 companies had agreed to cease their practice of writing fake online reviews for businesses and to pay more than $350,000 in penalties. "Operation Clean Turf," a year-long undercover investigation into the reputation management industry, the manipulation of consumer-review websites, and the practice of astroturfing, found that companies had flooded the Internet with fake consumer reviews on websites such as Yelp, Google Local, and CitySearch. In the course of the investigation, the Attorney General's office found that many of these companies used techniques to hide their identities, such as creating fake online profiles on consumer review websites and paying freelance writers from as far away as the Philippines, Bangladesh and Eastern Europe for $1 to $10 per review. By producing fake reviews, these companies violated multiple state laws against false advertising and engaged in illegal and deceptive business practices.

"Consumers rely on reviews from their peers to make daily purchasing decisions on anything from food and clothing to recreation and sightseeing," Attorney General Schneiderman said. "This investigation into large-scale, intentional deceit across the Internet tells us that we should approach online reviews with caution. And companies that continue to engage in these practices should take note: "Astroturfing" is the 21st century's version of false advertising, and prosecutors have many tools at their disposal to put an end to it."

Undercover Investigation of "Search Engine Optimization" Companies

In recent years, the reputation management industry has exploded as businesses have become increasingly concerned about their online reputations. So-called search engine optimization ("SEO") companies routinely offer online reputation management as part of their services.

Posing as the owner of a yogurt shop in Brooklyn, representatives from Attorney General Schneiderman's office called the leading SEO companies in New York to request assistance in combating negative reviews on consumer-review websites. During these calls, representatives from some of these companies offered to write fake reviews of the yogurt shop and post them on consumer-review websites such as Yelp.com, Google Local and Citysearch.com, as part of their reputation management services.

The investigation revealed that SEO companies were using advanced IP spoofing techniques to hide their identities, as well as setting up hundreds of bogus online profiles on consumer review websites to post the reviews. The investigation found that many consumer-review websites have implemented filters to detect and filter or delete fake reviews, with Yelp's being the most aggressive.

"More than 100 million visitors come to Yelp each month, making it critical that Yelp protect the integrity of its content," said Aaron Schur, Yelp's Senior Litigation Counsel. "We take many steps to do this, including the use of automated filtering software, leveraging our vast user community for tips about suspicious content, undercover sting operations, legal action, and cooperation with law enforcement. We applaud NY Attorney General Schneiderman for his willingness to tackle the issue of illegal fake reviews head on, and for his success in shutting down these operators. We look forward to continuing to cooperate with the New York Attorney General's office and any other interested law enforcement office or regulator to protect consumers and business owners from efforts to mislead."

Besides using their own employees to write and post the reviews, the companies hired freelance writers from as far away as the Philippines, Bangladesh and Eastern Europe for $1 to $10 per review. One SEO company required that freelancers have an established Yelp account, more than 3 months old, with more than 15 reviews (at least half unfiltered), and 10 Yelp "friends," as an attempt to avoid Yelp's advanced review filter.

Attorney General Schneiderman's office also discovered solicitations on sites such as Craigslist.com, Freelancer.com and oDesk.com to hire people to write fake reviews. For example, one SEO company posted the following:

We need a person that can post multiple positive reviews on major REVIEW sites. Example: Google Maps, Yelp, CitySearch. Must be from different IP addresses… So you must be able to have multiple IPs. The reviews will be only few sentences long. Need to have some understanding on how Yelp filters works. Previous experience is a plus…just apply --)we are a marketing company.

In another example, a spa in New York City was looking for help writing fake reviews:

I need someone who is a YELP expert to post positive reviews for a spa that will not be filtered using legitimate existing yelp accounts must have at least 10 friends on Yelp. Please be a yelp expert!! I will pay $10 per-review after 3 days they must meet the criteria above.

In this example, a nightclub in New York City was looking for people to post the reviews "without getting flagged":

Need Review Posters for Yelp, Citysearch, Google

Hello…We need someone to post 1-2 reviews daily on sites like: Yelp, Google reviews, Citysearch and any other similar sites. We will supply the text/review. You must be able to post these without getting flagged. This will be a long term assignment that will last at least 3 months. You are bidding per week. We are offering $1.00 dollar for every post. Thank you

Online Reputation Can Make Or Break a Business

Multiple studies conclude that online reviews can make or break companies. According to one survey, 90% of consumers say that online reviews influence their buying decisions. A highly-cited Harvard Business School study from 2011 estimated that a one-star rating increase on Yelp translated to an increase of 5% to 9% in revenues for a restaurant. Cornell researchers have found that a one-star swing in a hotel's online ratings at sites like Travelocity and TripAdvisor is tied to an 11% sway in room rates, on average. Gartner projects that by 2014, between 10% and 15% of social media reviews will be fake.

Nineteen SEO Companies and Small Businesses Entered into Assurances of Discontinuances

The OAG has entered into Assurances of Discontinuance with 19 companies, with penalties ranging from $2500 to just under $100,000. The practice of preparing or disseminating a false or deceptive review that a reasonable consumer would believe to be a neutral, third-party review is a form of false advertising known as "astroturfing." Astroturfing is false and deceptive, and it violates, inter alia, New York Executive Law § 63(12), and New York General Business Law §§ 349 and 350.

The companies that agreed to discontinue their astroturfing practices and pay a penalty include:

Zamdel, Inc., d/b/a eBoxed, a search engine optimization company based in New York City, which posted more than 1,500 fake reviews of clients on consumer-review websites such as Yelp.com, Google Places, Yahoo! Local, Citysearch, Judy's Book and InsiderPages.com. eBoxed attempted to defeat consumer-review website filters by changing the IP address of the computer from which it posted the reviews every week, making the reviews look like they came from different users.

XVIO, Inc., another search engine optimization company based in New York city, which posted hundreds of fake reviews of clients on consumer-review websites. XVIO also conducted a "secret shopper" campaign where its agents received free or discounted goods and services from XVIO's clients in exchange for a review. However, the reviewers were encouraged to post on consumer-review websites only if they were positive, the "secret shopper" did not disclose that he or she had received a free or discounted product or service of the reviewed-business in the review, and the client knew the identity of the "secret shopper" prior to providing the product or service to be reviewed.

Laser Cosmetica, the now-former owner of this well-known laser hair-removal business with multiple locations in the tri-state area orchestrated an astroturfing campaign, hiring an SEO company that posted fake reviews on consumer-review websites, and instructed employees and friends to write fake reviews on consumer-review websites. They also offered discounts on services in exchange for online reviews, without requiring the customer to disclose the gift in the review.

US Coachways, Inc. The management of this leading national bus charter company based in Staten Island, NY orchestrated an astroturfing campaign, writing bogus reviews themselves, soliciting freelance writers from oDesk.com and Fiverr.com to write bogus reviews, and urging employees to pose as customers and write positive reviews. They also offered $50 gift certificates to customers to write positive reviews without requiring that the customers disclose the gift in the review.

Swam Media Group, Inc. and Scores Media Group, LLC. The manager of this licensee of the Scores gentlemen's club franchise orchestrated an astroturfing campaign with the help of a freelance writer that resulted in 175 fake reviews of entertainers at the Scores adult club in New York City and an affiliated website, scoreslive.com, most of which were posted online.

The entire list of companies that entered into Assurances of Discontinuance is:

A&E Wig Fashions, Inc. d/b/a A&E and NYS Surgery Center

A.H. Dental P.C. d/b/a Platinum Dental

Body Laser Spa Inc.

The Block Group, LLC, d/b/a Laser Cosmetica and LC MedSpa, LLC

Bread and Butter NY, LLC d/b/a La Pomme Nightclub and Events Space

Envision MT Corp.

iSEOiSEO

Medical Message Clinic and HerballYours.com

Metamorphosis Day Spa, Inc.

Outer Beauty, P.C., Lite Touch Plastic Surgery, P.C., Staten Island Special Surgery, P.C., Sans Pareil Surgical, PLLC

Stillwater Media Group

Swan Media Group, Inc. and Scores Media Group, LLC

US Coachways Limousine, Inc. and US Coachways, Inc.

Utilities International, Inc. d/b/a Main Street Host

The Web Empire, LLC

Webtools, LLC and Webtools Internet Solutions Ltd.

West Village Teeth Whitening Service, LLC; Magic Smile, Inc., aka Magic Smile

XVIO, Inc.

Zamdel, Inc. d/b/a eBoxed

The investigation was conducted by Assistant Attorneys General Clark Russell and Jordan Adler, and Investigator Vanessa Ip, in the Internet Bureau, with special assistance from Deputy Bureau Chief Susan Scharbach of the Real Estate Finance Bureau, under the supervision of Executive Deputy Attorney General of Economic Justice Karla G. Sanchez.