Browser Beware

Before you rely on an online ratings service, get to know the source -- and how it makes money.

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Special Report

When you're shopping online, whom can you trust to give you the best shopping experience? That's the quandary facing consumers and small-business owners alike who are buying goods from unfamiliar Web stores. And with so many online companies vying for your hard-earned dollars -- not to mention the fact that so many of them are in questionable financial condition -- it's natural to want to look to a trusted third party for a recommendation. But before you rely on an online ratings service like BizRate.com or Gomez.com, you'd better read the fine print.

Consider the experience of Jehremy Foster, who was in the market for a camcorder this past December. He thought the camera would make a good Christmas present for his wife, who was then six months pregnant. An experienced Web shopper, Foster, 30, browsed consumer comments in an online camera forum until he settled on the model that seemed best for his soon-to-be-growing family: a Canon ZR10.

Foster's next stop: MySimon.com's comparison-shopping service, where he sorted by price a listing of online merchants that sold the Canon camcorder. Noting that the lowest-priced vendors were listed at the top, Foster scanned down the list until he found vendors that rated at least two out of three possible stars on Gomez.com, an online ratings service. Family Photo and Video -- a company that Foster had never heard of -- had a Gomez rating of two stars and was selling the camcorder at the then-attractive price of $697. The prices other vendors listed for the same item ranged from $735 to $1,069.

Foster says that he then searched for Family Photo and Video on BizRate .com, which rates 2,000 online merchants based on customer-survey information. The photo store rated an 8.3 out of 10, which sounded pretty good to Foster, so he placed the order online and crossed that item off his gift list.

But the next day, Foster says, he got a call from a salesperson at Family Photo and Video that he found disturbing. The caller was pushing him to buy accessories and extra batteries for the camcorder he had just ordered. "It was totally bizarre," says Foster. "Once the salesman realized I wasn't going to buy anything extra, he was very rude and short with me." (Family Photo and Video customer-service supervisor Mike Tate responds that sales reps follow up with customers primarily to confirm orders that might be bogus, and to offer promotional discounts. "There's no pressure to buy," he says, noting that Family Photo's salespeople don't work on commission.)

Unsettled, Foster tracked down Family Photo and Video's off-line address. When he found out that the business was located in New York City, he logged on to the site for the Better Business Bureau of Metropolitan New York. There, to his mounting dismay, he found numerous complaints about Family Photo and Video -- although the store was listed under another name, Abe's of Maine.

A general Web search for Abe's of Maine led Foster to Photo.net, an online community of amateur and professional photographers, where he discovered some 70 complaints from people who said they had been burned by Abe's of Maine. The complaints alleged everything from getting billed for $400 shipping charges to the old bait-and-switch routine. (A favorite ploy of certain camera merchants is to say a hot camera model is in stock and then ship a different model.) Foster wondered how Family Photo and Video had managed to get such seemingly favorable ratings from both BizRate.com and Gomez.com.

Foster's unfortunate experience notwithstanding, Tate says the ratings accurately reflect his company's level of service. "We have a toll-free number, and whatever the problem, we will handle it," says Tate. More than half of Family Photo and Video's business comes from repeat customers, he adds. And given the site's typical daily volume of about 200 orders, he maintains that receiving roughly 70 negative remarks on Photo.net during what was actually a five-year period isn't a bad record at all.

Still, Jehremy Foster's story begs the question: How is it that the online ratings systems don't reflect the bad experiences of people like Foster and visitors who post messages on Photo.net?

The short answer is that ratings services are designed to spotlight good online merchants, not to warn consumers about bad ones. After all, the vast majority of online ratings sites are operated by companies that need to make money in order to keep providing their services. Most of the companies receive some part of their revenues from the merchants they are rating. Such a relationship between the ratings services and the companies they report on presents at least the appearance of compromising the quality of those ratings.

San Francisco-based CNET Networks has considered posting consumer feedback regarding online merchants but has so far steered clear. "We don't have the ability to verify whether a particular poster is truly a buyer from that merchant or whether it's another merchant looking to slam their competitor," says Dan Miller, director of CNET's Shopper.com, a comparison-shopping service. CNET tracks feedback from consumers about resellers but doesn't publish the individual comments. The feedback is offered to the merchants, and Miller says that most consumer complaints reported to CNET are resolved within two days. To help authenticate the complaints, consumers are asked to submit a customer-order number with a complaint about a vendor. In the future, Miller hopes to add to CNET's merchant information the number of complaints the site has received about each vendor, as well as how many of those complaints have been satisfactorily resolved.

Ratings services are designed to spotlight good online merchants, not to warn consumers about bad ones.

If the situation is complicated for ratings purveyors, it's even more befuddling for the average consumer, who's likely to simply take the ratings at face value. But the fact is, using ratings sites effectively requires knowledge of the raters' business model and of the degree to which the company's economic interest could skew the way the information is presented.

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