The official Google Blog writes:
A recent article by the New York Times related a disturbing story. By treating your customers badly, one merchant told the paper, you can generate complaints and negative reviews that translate to more links to your site; which, in turn, make it more prominent in search engines. The main premise of the article was that being bad on the web can be good for business.
So Google assembled a team to look into the matter and devised, hold your breath, an algorithmic solution! What it does is essentially detect which merchants have an excess of poor user reviews and subsequently factors that into their ranking algorithm.
We can’t say for sure that no one will ever find a loophole in our ranking algorithms in the future. We know that people will keep trying: attempts to game Google’s ranking, like the ones mentioned in the article, go on 24 hours a day, every single day. That’s why we cannot reveal the details of our solution—the underlying signals, data sources, and how we combined them to improve our rankings—beyond what we’ve already said. We can say with reasonable confidence that being bad to customers is bad for business on Google. And we will continue to work hard towards a better search.