Monday, January 20, 2014

Scam Psychology: Why Scammers Use Testimonials, and Why You Should NOT Trust Positive Reviews

Why do advertisements almost seem to have testimonials? Because they do influence us.

Human beings are social creatures, and we do learn from each other, so when we hear testimonials, we pay attention. This is sometimes called 'social proof'. Some benefits from testimonials include:

  • It builds trust
  • It sound less sales-y
  • It demonstrates the benefits of products/service

The problem happens when we do not apply "crap filter" to testimonials, and scammers start to seed the testimonials with fake entries. In fact, you can find people who will do fake testimonials for you for a mere $5.00 USD on  Furthermore, in the modern world of information overload, people are less and less likely to fact-check or do "due diligence" on common stories.

Image representing Yelp as depicted in CrunchBase
Image via CrunchBase
It's estimated that in a few years, 20% of all reviews online (including testimonials) will be fake. The crowd-review websites such as Yelp, AngiesList, and so on who rely on testimonials and reviews are starting to combat this problem, and even government have started to notice such problems.

So you should NOT trust positive reviews, but seek to verify the claims.

And if you do find a sincere positive testimonial, it may STILL be "wrong"... in that the testimonial may be influenced by the five factors that result in a sincere but fake review.

What are the five factors in a sincere but "fake" review?

  • Personal Bias
  • Preconceived Notions
  • Unscientific (lack of control) results
  • Placebo Effect
  • Misattribution of efficacy

Personal bias, which is related to Ikea effect, means the speaker has a personal stake in the product (s/he bought it!) and thus wants to BELIEVE it will work (self-serving bias).

Preconceived notion means the speaker expects the product to work, therefore will unconsciously cherry-pick the results and emphasized the effects while ignoring the times that it did not work, or even misinterpret random chance as "proof".

Unscientific results (lack of proof) means result of a single person is worthless, statistically speaking, without comparison to a control subject (who did not take the product), and the quantity scaled up to eliminate random outside factors and establish true cause and effect.

Placebo effect is related to preconceived notion, as the body often reacts to placebo treatment. Thus, you need a control group (or two) to test different control conditions. Without such study, you cannot discount the placebo effect... your body responded because you expected to respond.

Finally, misattribution of efficacy often applies to combos, where the common ingredient was actually the effective ingredient, but the speaker assumed that the exotic ingredient was the real effective ingredient. A while back, I had a commented who claimed ganderama (lingzhi) coffee suppressed her appetite and helped her lose weight (so everybody should buy it). I showed her an article from Time magazine that explained ANY liquid will suppress appetite, even plain water. Never heard from her again.

Basically, testimonials nowadays need to be fact-checked, and determine how much of it you can trust, subject to these five problems of a sincere but "fake" review.

Now we come to the flip side... What should you do about negative reviews?

You should pay EXTRA attention to them.

Why? Because a lot of companies have attempted to suppress negative reviews, through lawsuits, and "reputation management" firms (some of whom use shill reviews to crowd out the bad reviews). In fact, one of my own reviews of a potential scam (at the time) was taken offline by a consultant working for the scam. One month later, they were closed by the SEC as a $850 million Ponzi scheme.

Of course, you have to treat such reviews with the same due diligence as you do to the positive reviews. Does the reviewer / testimonial giver provide evidence to support his/her bad review? Or does s/he simply "have an axe to grind" and offered all emotion but little evidence?

And beware people who tell you "don't look at review sites". What are they trying to hide?

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