I'm also surprised that Amazon has such a poor handle on their product reviews. Obviously fake reviews absolutely litter the site. Speaking as only a consumer, it makes the process of purchasing much more cumbersome than it ought to be.
It's not reasonable to expect Amazon (or anyone, really) to detect fraudulent behavior with perfect accuracy. I have to agree with the OP, though, in that they should be able to do a lot better. Many fake reviews are blatantly fake, and could easily be flagged by a relatively naive set of heuristics.