Cyber Monday Scams: Spotting Fake Reviews & Sellers | Fakespot

The recent pandemic has fundamentally altered the retail landscape, making a robust online presence nearly essential for survival. While businesses heavily reliant on in-store customers, such as J.Crew and Sur la Table, have faced bankruptcy this year, companies with strong e-commerce capabilities, like Target and Walmart, have experienced significant growth. Currently, Amazon captures approximately one-quarter of all online spending by U.S. consumers.

However, the increase in online shopping has also led to a surge in fraudulent activity. This issue is substantial enough that companies assisting businesses – for instance, those identifying suspicious transactions for banks – are attracting considerable investment. Meanwhile, a New York-based company, Fakespot, is pursuing a different strategy. It utilizes artificial intelligence to alert online shoppers to potentially counterfeit products or fabricated reviews on platforms like Amazon and eBay.

We recently spoke with Saoud Khalifah, an immigrant from Kuwait, about his four-year-old venture, which originated in his university dormitory following a personal experience with unsatisfactory nutritional supplement purchases on Amazon. After completing his master’s degree in software engineering, he formally launched the company.

Initially, like many startups, Fakespot concentrated on assisting enterprise clients in detecting counterfeit goods and inauthentic reviews. With the onset of the pandemic, the company identified an “opportunity” – as Khalifah phrased it – and shifted its focus to directly supporting consumers using platforms that often prioritize seller protection over buyer security and struggle to maintain quality control.

This strategic shift appears to be successful. Fakespot recently secured $4 million in Series A funding, spearheaded by Bullpen Capital, with participation from SRI Capital, Faith Capital, and 500 Startups, bringing the company’s total funding to $7 million.

The company is also attracting increasing attention from shoppers. Khalifah reports that a Chrome browser extension, released earlier this year, has been downloaded 300,000 times, in addition to the “millions of users” who have utilized Fakespot’s website to analyze product reviews and receive free data to aid their purchasing decisions.

Khalifah states that since its inception, Fakespot has compiled a database containing over 8 billion reviews – approximately ten times the number held by the popular travel website Tripadvisor – which serves as the learning foundation for its AI technology. He asserts that the technology is now advanced enough to recognize AI-generated text and easily identify artificially inflated reviews or positive feedback, likely originating from click farms. (It also monitors fraudulent upvotes.)

Currently, shoppers can utilize the Chrome extension across major marketplaces, including Amazon, eBay, Best Buy, Walmart, and Sephora. Khalifah indicates that the technology will soon be extended to assess products sold through Shopify, a software platform hosting hundreds of thousands of online stores. (Shopify surpassed eBay last year to become the second-largest e-commerce platform in the U.S.)

Fakespot remains free to use, as each consumer review submitted contributes to the ongoing training of its AI. The company anticipates future revenue generation through premium tools built upon its free service and potential lead-generation agreements with companies whose products and reviews have been verified as authentic.

The effectiveness of the technology remains a key consideration. While Khalifah confidently promotes Fakespot’s capabilities, reviews on the Google Play store present a varied perspective, with a mix of positive and less favorable feedback.

Khalifah acknowledges the need for improvement in Fakespot’s mobile applications. Despite the company’s primary focus on the desktop experience, he notes that mobile devices are projected to account for over half of all online shopping within the next year, a trend he recognizes is linked to the easing of pandemic restrictions and a return to more mobile lifestyles.

He also points out that “ironically, many negative reviews come from sellers who are upset that we’ve given them failing grades. They are often displeased that we exposed the presence of fake reviews for their product.”

Regarding future improvements, Khalifah believes the most effective approach is straightforward. “We hope to gain more satisfied users,” he says, concluding: “No one else is truly advocating for consumers.”