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Why It's Harder to Game Positive Online Reviews

Gaming positive reviews online is getting harder.

Scott Eells | Bloomberg | Getty Images

The website Yelp — which connects local businesses with user-contributed reviews on everything from restaurants to local dentists — recently launched a new "Consumer Alert" system that clamps down on fraudulent reviews.

A warning message will appear on business pages, when Yelp believes a company has paid for its reviews. One potential red flag is a large number of reviews from the same Internet Protocol or IP address. Another possible sign of suspicious activity can be a reviewer or commentor with little or no profile details.

Yelp's new system is part of a larger technolgy trend in which savvy digital consumers are demanding transparency and objective reviews on everything from businesses to specific products. Facebook launched a plan this summer to crack down on suspicious fake page "Likes." Businesses, large and small, create company-specific pages on Facebook and encourage followers to "Like" them. (Read more: Facebook Police: Site to Crack Down on Suspicious Likes)

(Read more: Why Crowdfunding Isn't a Pot of Gold for Entrepreneurs)

The fact that more consumers turn to ratings on Yelp and other platforms has been a gamechanger for emerging entrepreneurs. Small businesses traditionally have been unable to afford pricey marketing and advertising campaigns.

With Increased Visibility Comes More Fraud

By maximizing positive exposure on free websites such as Yelp, Facebook and other platforms, an upstart can go from obscurity to local, viral darling. Roughly 31 percent of consumers today check an online review before making a buying decision, said Jenny Sussin, senior research analyst at Gartner, a consultancy based in Stamford, Conn.

The ecosystem of social-media ratings and reviews is reliant on objective consumers sharing likes and even dislikes, creating a digital word-of-mouth campaign. If a friend you trust likes something, chances are you will too — and pass it along.

"What these sites run on is credibility," Gartner's Sussin said. "It's been able to give small businesses extra visibility and credibility without big budgets."

But the increased influence of sites such as Yelp has also spawned more reviews paid for by the companies themselves — and not flagged as such. Fraudulent social-media ratings and reviews will comprise 10 to 15 percent of all such reviews by 2014 — compared to 2 and 6 percent now, according to Gartner's research.

In 2009, the Federal Trade Commission determined paying for positive reviews without disclosing the reviewer had been compensated equates to deceptive advertising and would be prosecuted as such.

But with business risk comes opportunity. Gartner forecasts the emergence of companies specializing in the creation and management of online business reputations. One example is U.K. based KwikChex.

Yelp's 90-Day Monitor Period

Yelp, meanwhile, is trying to manage such risks on its own. The San Francisco-based company is placing its consumer alert message on a business's profile page, when it determines there have been significant efforts to purchase fake reviews to mislead consumers.

"While our filter already does a great job of highlighting the most useful content, we think consumers have a right to know when someone is going to great lengths to mislead them," Eric Singley, vice president of consumer products and mobile at Yelp, said in a statement.

Unless there's evidence of ongoing suspicious activity, the alert will be removed form the Yelp business page after 90 days.

And Yelp will likely be managing even more risk in the future. With a presence in Canada and and Europe, the firm expanded its footprint on the continent by announcing on Wednesday it had acquired Qype, Europe's largest local reviews site.

Email us at SmallBiz@cnbc.com and follow us on Twitter @SmallBizCNBC.

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