Amazon (AMZN) stock was higher today as it pledged to crack down on and even ban users who post fake reviews on its e-commerce site.
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Tough Sanctions
Amazon today committed to the Competition and Markets Authority (CMA) in the U.K. that it will enforce “tough sanctions” against businesses that boost their star ratings via bogus reviews, including bans from selling on the website.
Sanctions will also be applied to users who post fake reviews, who could be banned from posting reviews altogether.
The undertakings also tackle CMA concerns about “catalog abuse.” This is where sellers hijack the reviews of well-performing products and add them to an entirely separate and different product, in order to falsely boost its star rating and mislead consumers.
That could mean a consumer is excited that they have found a pair of 5-star headphones, but on closer inspection, discovers that the majority of reviews are about a mobile phone charger.
Protect Consumers
The undertakings come as part of a CMA crackdown on U.S. tech to help protect consumers online.
The CMA launched an investigation into Amazon back in 2021 over concerns that the company was breaching consumer law by failing to take adequate action to protect people from fake reviews — including not doing enough to detect and remove fake reviews, act on suspicious patterns of behavior, or properly sanction reviewers and businesses taking part in fake review activity.
Earlier this year, the CMA secured similar undertakings from Alphabet-owned Google (GOOGL) that led to it making significant changes to its processes for tackling fake reviews, including sanctions for repeat offenders. It is also investigating Google for its dominance in search and search advertising services.
The CMA estimates that as much as £23 billion of U.K. consumer spending is potentially influenced by online reviews every year.
Is AMZN a Good Stock to Buy Now?
On TipRanks, AMZN has a Strong Buy consensus based on 47 Buy and 1 Hold rating. Its highest price target is $305. AMZN stock’s consensus price target is $241.64 implying a 16.60% upside.
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