Happy Birthday, Julia.

- Oh, thanks, hun.

- [Philip] I know Julia's gonna this stained glass chihuahua lam The pictures online were gorgeou and it looks just like our littl - [Julia] Wow, hun, it's... - What the, this isn't what I or - Well, where'd you get it?

- Online.

(bright music) - The difference between this image and this, whatever it is, may be stark, but it's not exactly new.

Advertisers have been using misleading imagery since, well, since there's been adverti Campbell's used to fill a bowl with glass marbles before adding the soup to keep t close to the surface, and cereal commercials used glue instead of milk so the bits looked fresh and cri - Thing is, while there ar laws against false advertising, the line is pretty fuzzy.

Marketers are allowed to take some stylistic liberties, legally known as puffery.

In fact, just a couple years ago Wendy's and McDonald's got a lawsuit dismissed that accused them of deceiving c with photos of burgers that were and juicier than the actual prod The judge basically implied that no reasonable consumer would take the images at face va It's almost like because we expe to use deceptive images, that makes the images not deceptive, or something.

- Technically, these standards are supposed to apply to AI-generated images as well, but practically it feels like the wild west out there.

I don't know about you, but leading up to Christmas, I was being pummeled with ads for these hyper-realistic robot An attorney might argue that this is just puffery, that no reasonable consumer woul this kind of technology was remotely possible.

But it's clear from social media that plenty of buyers thought they were gettin something more advanced than thi (toy dog barking) - [Buyer] Well, this is what I g - Well, you know what they say, caveat emptor.

That's Latin for let the buyer b - I know.

The phrase has bee popular for at least 400 years as an acknowledgement that in most transactions, the seller has the upper hand because they know much more about the item being sold than the buyer does.

In economics, that's known as information asymmetry.

- Caveat emptor encourages buyer to shrink that advantage by doing their own research.

Horse traders, for instance, check the animal's teeth to see if he was old and sickly, giving rise to another famous sa "Don't look a gift horse in the It means don't nitpick something you're getting for free.

- I know.

Until relatively recently, it would've seemed crazy to buy without personally inspecting it I remember going to th department store with my parents and my dad would actually open b and handle the product to get a sense of the quality.

But today, all we have to go on are pics and descriptions, which are already heavily manipu and now thanks to AI might be completely fabricated.

With some of these listings, you get the sense that they started with the AI image and then tried to figure out how to make a physical product o - But even as the internet has exacerbated information asym it's also offered a way to level the playing field: user Imagine an ancient horse trader having to divulge all his previous buyer's opinion to every potential customer.

That's got to erase the seller's advantage, right?

- Alas, everything on the internet can be gamed.

According to the World Economic around 4% of online reviews are likely fake, and that's probably a low ball f since so many go undetected.

They estimate that these reviews influence over $150 billion of global spending a year.

- [Philip] Sometimes those fake can come from real customers who are enticed by some benefit from the seller.

Many shoppers report being offer free merchandise, discounts, or with the implicit expectation that they would change their negative review to a positive one.

- [Julia] But there are also lar sophisticated review brokers that can be hired to inundate new listings with a thick layer of five star This is technically illegal, but since most of thes brokers are operated overseas, it's pretty hard for agencies like the FTC to enforce.

In fact, it's shockingly easy to find Facebook groups that you can join that offer fre and payment for reviewing certain products.

- Savvy shoppers have known for a long time to be suspicious of reviews with strange grammar or spelling or seem a little too effusive about a new toilet seat lid.

But thanks to AI, fake reviews are sounding more authentic by the day and are easier to produce at hig Big sites like Amazon and Google are responding with their own AI-powered detection algorithms, but if history is any guide, scammers will usually find a way - "So what else is new?"

You might be thinking.

We all know that onlin reviews are not to be trusted, and yet 90% of shoppers still check reviews before making any purchase.

Psychologists call this social p Before making any decision, most people need to feel like others have already done it, even if that feeling is an illus - Maybe that's not a big deal when it comes to mugs and lamps, but people also trust online rev when selecting contractors, lawyers, therapists, even surgeons, decisions that can have long, life-changing consequences.

One survey found that 75% o patients consulted user reviews as the first step to finding a n However, multiple studies have shown virtually zero correl between a medical professional's online rating and the actual quality of care they deliver.

- How is it that with all our technological and economic complexity, it's still so easy to game the s One answer is scale.

Google Maps has over 200 million businesses and places listed worldwide.

Amazon may have as many as 600 million products.

Even with sophisticated AI gatek it's not hard for fraudulent products and reviews to blend in with such a massive - [Philip] Step one, use AI to generate an enticing, yet plausible product page that will grab the attention of casual browsers.

Step two, hire cheap manufacture to fabricate low-quality items that look vaguely like their promotional photos.

Step three, pay a review broker to fill your listing with great - But remember, it won't last lo Pretty soon, enough real customers will have flagged your listing or left bad reviews to tank your placement, but no matter, since it's also inexpensive to set up, you can just close up your e-shop and start again.

With 600 million listings to mon it's pretty hard for Amazon to shut you down before you've made enough money for the scheme to stay profitabl - And it's not 100% certain that they'd want to anyway.

The incentive structure for these big e-tailers is a bit conflicted.

On one hand, they don't want to get a reputation for selling junk, but on the oth they do make a commissio from every one of those sales.

Just like the social media platf engagement is currency, even if - [Julia] Perhaps they'd treat the problem with more urgency if they could be held legally li for hosting fake products and fake reviews.

But thanks to Section 230 of the Communications Decency Ac no online platform can be held accountable for content published by third-party posters It's the same provision that protects Facebook, TikTok, and YouTube from liability for content that harms users.

And that's why the FTC can only go after businesses that pay for fake reviews or brokers that sell them, never the platforms themselves.

- The one thing mega retailers like Amazon usually offer is ret which is a good way to protect consumers from scams, but only if they use them.

There's no way to know how many people don't bother returning disappointing products but it's obviously enough to keep the scams profitable.

- Like everyone else, we look at reviews when buying something online, but in recent days, I've come to rely more on trusted review outlets like Wirecutter and Consumer Rep Unlike the shopping sites, their only asset is their credib - We also try to ask for recomme from real people that we know in real life.

I know, old-fashioned, right?

But when it comes to big life de it's just too hard to know that what you see on screen is what you'll really get.

- [Both] And that's our two cent