Reputational Sanctions in an Age of Internet Manipulation?

A major argument against substantive regulation of industries (including consumer finance) is that the market self-regulates. Bad actors get bad reputations and lose business.  Therefore, there's no need for government to intervene.  

This type of argument involves a significant set of assumptions about how reputational sanctions work for any particular product and about the inability of bad actors to simply rename themselves. Often, these assumptions are unexamined or unwarranted--ideology trumps all--but the development of the Internet as a reputational reference complicates things. 

The Internet provides a tremendous aggregation of reputational feedback, with everything from formal reviews to "XYZsucks.com" sites, etc. But the typical Internet reputational search involves a google search or the like, and the search results are manipulable. Not only can they be manipulated, but there are whole businesses set up to do just that.

Consider this one I stumbled across tonight: www.reputationchanger.com.  The site makes clear that it will just flood out the negative reviews with manufactured positives:

We create a number of online assets such as blogs, minisites, and social media profiles on your behalf.  Once created we boost these digital properties in the search engines. Very quickly these listing populate internet search results and outrank the negatives.

At the end of the online reputation repair campaign, you will effective [sic] control all 10 listings on page 1 of Google, Yahoo, and Bing. 

One of the case studies given is of a direct marketing company that settled an action with the FTC. The Reputation Changer "completely suppressed" the negative listings from page 1 of Google and "repopulated new/positive listings." They will also manipulate google auto suggest for you.  And the site claims that "It is proven that 90% of people do not search past the first search page for any given query." Combine a flood of positives and manipulated auto suggests, and the service sounds like it would be quite effective, if the 90% claim is true.  [Let's see how fast they bury this blog post...]

What are we to make of this reputation manipulation industry? On the one hand there are free speech concerns. And it's not as if the manufactured postings are themselves necessarily false (if they are, that's another matter). It's not so different than hiring a publicist or having a celebrity to pose with a product or say something complimentary about it--that's just adding positive reputational noise.

On the other hand, however, I wonder if this sort of manipulation of reputational sources--flooding the information marketplace with true noise--is in and of itself an unfair and deceptive act or practice. This strikes me as qualitatively different from hiring a celebrity to shill for a product. The celebrity pitch is creating positive noise, but this is really aimed at drowning out negative noise. In other words, the goal of the reputationchanger product is to inhibit the consumer's ability to find out negative information about a product, not just to provide positive information to the consumer.

The UDAP issue aside, these products currently exist. Can we give any serious credence to reputational sanction arguments in such a world? Or do we just have to be honest and say that we don't really care if there isn't a reputational sanction, we just don't like regulation? There was something refreshingly honest about Justice Scalia's astonishing declaration in AT&T v. Concepcion that the contracts of adhesion ship has long sailed, so fundamental contract law issues like meeting of the minds be damned? Maybe we can finally drop the pretense of economics in anti-regulatory arguments.