The Effects of Compensation Disclosure and Consensus on Perceptions of Online Product Reviews

Online product reviews are an influential source of information during a purchase decision. This has drawn the attention of some marketers who attempt to manipulate the reviews by compensating reviewers for favorable reviews. In response, the FTC has mandated disclosure of any compensation the reviewers receive. Using Prominence-Interpretation Theory and Social Validation theory, this work explores the competing impacts of compensation disclosure and review consensus on credibility and helpfulness of reviews. A 3 (no disclosure, disclosure with no warning, disclosure with warning) x 2 (consensus, disagreement) experiment was conducted (N = 267). Compensation disclosure decreased credibility and helpfulness for all reviews. But, this effect was moderated by the provision of consensus information. Disagreement among reviewers enhanced the effect of a compensation disclosure, but consensus among reviewers mitigated the disclosure´s effect. Warnings about potential conflicts of interest prior to encountering a disclosure did not impact credibility and helpfulness.