Be Wary of Online Reviews

Over the last few weeks, I’ve received several emails that suggest that many people are still unaware of one of the major conflicts of interests that you face when reading material on a blog. Specifically, when you read a blogger’s review of a product or service, it’s important to understand that, in many cases, the review is meant to function as a sales pitch.

Imagine that you’re considering buying a Subaru Outback. You Google “Subaru Outback review” and you come across the website for a Subaru dealership, where they review the latest Outback model.

The review is likely a good source of information, written by a person who is knowledgeable about the topic. But there would be no doubt in your mind that the goal of the review is to sell you an Outback. And, because of that obvious goal, you would take anything you read with a grain of salt. You wouldn’t expect the review to lie, but you would expect the overall tone of the review and the information included (and excluded) to be influenced by the dealership’s goal of selling you a car.

That’s often what it’s like when you read a review on a blog (despite the fact that the conflict of interests is less obvious). The review is meant to function as a sales pitch, because the blogger participates in an “affiliate program” for the product/service being reviewed — meaning that the blogger receives a commission if you click from their site to the site of the product being reviewed and you make a purchase or create an account.

As with the Subaru dealership’s Outback review, a blogger’s review is unlikely to include any false information. But it’s super common to omit relevant information that might lead you to do something other than buy (or sign up for) the “reviewed” product. For example, when writing about the robo-advisor Betterment, somebody might write that it’s hands-off, easy to understand, based on solid research, and low-cost. All of those things are true. But the reviewer will often neglect to mention that all of those things are also true of a Target Retirement fund from Vanguard — and the costs of the Vanguard fund are even lower.

[Just to be clear, my point here isn’t that Betterment is necessarily a worse choice than a less expensive target date fund. It can make sense in some circumstances. The point is simply that it’s important to understand that the reviewer is likely paid a commission by Betterment but not by Vanguard — and you should be aware of the various ways in which that influences the writing.]

Commonly reviewed/promoted companies with affiliate programs include Betterment, Wealthfront, Lending Club, LendingTree, Personal Capital, CreditSesame, Fundrise, and many more. (The list changes frequently as companies begin new affiliate programs or end existing ones.)

At least in theory, bloggers are supposed to disclose the fact that a link is an affiliate link, but in the real world this is rarely done in a way that is obvious/clear for the reader. In general, if you read a review that seems especially positive, you will want to treat the review with some skepticism, as there is a good chance that the reviewer is operating as a paid salesperson.