What do Digg and eBay Have in Common?

Written by Guest Blogger, Lauren Davis – Georgetown Law student

What do Digg and eBay have in common?  Their rating systems are under assault by the fraudsters, and in some cases, this mischief is undermining the systems’ credibility and effectiveness.

There has been a great deal of buzz surrounding a recent article in Wired magazine. The piece, entitled “Herding the Mob,” notes that online retail sites, such as eBay and Yahoo Auctions, and social bookmarking sites, including Digg, del.icio.us, and Reddit, share a common problem: the gaming of their community-based systems.

Social bookmarking systems are based on the principle that communities, rather than individuals, are best able to find and identify interesting and useful content.  Users submit and vote on links, and the most popular links are highlighted on the site.  Gaming of these sites occurs in a number of ways.  Sometimes individuals trying to drive traffic to their sites will set up multiple accounts; others will organize voting syndicates or hire firms to pay users for votes. Perhaps most insidiously, companies will pay top users, who are sometimes identified through a reputation system, to promote that company’s websites or products.  The desire to use democratic means to identify the best of the Internet is certainly understandable and admirable, but the anonymity of online interaction prevents us from knowing when an individual user is getting paid, scratching another user’s back, or completely nonexistent.

Similar gaming occurs on retail and auction sites through abuse of the reputation feedback systems.  Wired identifies one common scheme termed the “Pump and Chump.”  A merchant sells a large number of inexpensive items for a penny, and quickly receives positive feedback from buyers who are delighted at having received the items so cheaply.  Once they have received sufficient positive feedback, the merchant begins offering high-ticket items for sale.  The buyers never receive these more expensive items, and the merchant disappears with their money. Sophisticated gamers have found a number of other ways to manipulate reputation feedback systems, so that some merchants maintain a high quality of feedback even on marketplaces where they have received numerous complaints.  Banning these gamers seems to have limited effectiveness; they simply move to other sites, or reform and reopen on the same sites under a new name.

Social bookmarking sites are constantly looking for new ways to combat gaming, and some have addressed the problem of reputation.  In order to deal with accusations of the “Pump and Chump”-style problem of companies paying top users, Digg announced earlier this year that it would no longer display a list of the top users anywhere on the site.  It also no longer displays the number of popular posts a given user has submitted, hindering the ability of would-be gamers to identify more powerful Diggers.  Although the move upset some users, many hope that this proactive step will help prevent gaming and preserve the spirit of the site.

Given the problems associated with gaming, consumers on retail and auction websites will increasingly have to look for signals other than reputation feedback to identify trustworthy merchants.  While the wisdom (or at least the suggestion) of crowds will almost certainly continue to be part of the equation of deciding which merchant to buy from or which article to read, when it comes to handing over their money to an invisible stranger, consumers now more than ever need an additional sign that the merchant sitting behind the username is a real person, is on solid financial ground, and has earned their reputation through good service, honest dealings, and a commitment to their customers.

One obvious solution to the gaming of reputation systems is bonding. For example, on eBay, when a merchant is bonded by buySAFE, buyers know that in addition to being a highly rated merchant, there is an objective, trusted third party willing to back up the merchant’s transactions with a bond guarantee.  In essence, bonding makes eBay transactions completely risk-free for buyers.

Obviously, there is no stronger, credible signal of a merchant’s trustworthiness and reliability than a third party willing to not only endorse the merchant, but also guarantee the merchant’s transactions with a surety bond.  Bonding is a terrific solution to the gaming of community-based rating systems.

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