The ACCC recently announced it is targeting businesses that post fake reviews. This practice, which is a breach of consumer law, may mislead consumers who rely on reviews when making purchase decisions and can result in heavy penalties, the loss of reputation, compensation and substantial legal costs if defending a legal claim becomes necessary.
What’s in a fake online review?
The internet has transformed the manner in which people buy and sell goods and services and allowed people to purchase goods and services from all over the world with far greater ease than at any point in history. The COVID-19 Pandemic also resulted in businesses becoming far more dependant or reliant on online sales, as opposed to traditional store-front retailing.
As the prevalence of purchasing goods and services over the internet continues to grow, so too has the need for online reviews for the purpose of building trust in the services or goods being sold, in the hope that the business will gain a larger market share. If you’ve never seen the skit by Michael McIntyre on going on holidays and the reliance on online reviews to select a hotel, you might want to watch it for a bit of a laugh… after reading this post of course!
If you’re a business, you or your marketing department will know the importance of having customer reviews to promote your service or product. You may have even considered using a third-party review site like Yelp. But what are the benefits of customer reviews, and is it really worth it?
Marketers tell us that customer reviews can be extremely beneficial to businesses because they provide social proof that others have used and enjoyed your product or service, which can encourage new customers to try it out. Reviews can also help businesses to identify areas where they need to improve.
Of course, there are some downsides to customer reviews, and it’s important to monitor what’s being said about your business, as a lot of negative reviews can do serious damage to your reputation. You also need to be aware of the legal obligations you have in respect of online reviews.
Over the years, fake reviews have become more prevalent, and more recently this has evolved into ‘brushing’ – a scam that sees people receiving goods they never ordered for the purpose of the online marketer then using that person’s details to post a fake (positive) review. Whilst rogue businesses might deliberately set out to grow their market share by posting fake reviews, well-meaning businesses should also be careful in how they use and rely on reviews to build trust in their business.
It’s against the law to create or post fake or misleading reviews
It is against the law for businesses to post fake or misleading reviews, or to arrange for other parties to do so on their behalf. So, if you’re paying a third party to manage your online reviews, you need to be careful that you are not paying for fake reviews. Aside from the reputational damage this can cause to your business, you could also be liable to pay penalties or be the subject of claims by consumers.
The ACCC, short for the Australian Competition and Consumer Commission, provides general guidance on product and service reviews. The ACCC, is an independent Commonwealth statutory authority that has a role to enforce the Competition and Consumer Act 2010 and other legislation, promote competition and fair trading and regulate national infrastructure. Further information can be located here.
More recently, the ACCC which regularly targets industries or issues in an attempt to protect consumers, announced that it will be targeting companies that are ‘greenwashing’ and posting misleading reviews on their websites, Facebook pages and third-party review platforms. You can read our post about the ‘greenwashing’ review. Importantly, if found to be breaching the guidelines you could face enforcement action by the ACCC which has said it won’t hesitate to do. Penalties can be severe, the cost of defending such action can run into the thousands and the reputational damage could be even more damaging.
As such, if you are a business that relies on online reviews, it is now more important than ever to ensure you are aware of your obligations under Australian Law, and if you are in doubt, you should immediately conduct an audit of your online reviews and process (particularly where you rely on third parties to run this for you) to ensure you are complying.
Should you be concerned about review bombing?
Review bombing is a situation in which a large number of people (or a few people with multiple accounts) post negative user reviews online for a business in an attempt to harm the business. Traditionally, review bombing occurred largely in relation to movies and video games (often coordinated on internet message boards), however with more and more businesses having an online presence and with the power of social media, it now often occurs following a customer’s social media post about an issue with the business going ‘viral’, which can (particularly if there is a political or cultural issue involved in the complaint) result in hundreds or thousands of individuals leaving negative reviews.
It may be tempting to delete such negative reviews, however, the ACCC warns that a business may mislead consumers if they:
- suppress or edit negative reviews
- remove genuine reviews that are negative.
As such, you need to be careful that you have reasonable grounds to believe that a review is likely to be fake or misleading before removing or editing it.
If you have concerns that people are leaving fake reviews of your business, or that another business is relying on false or misleading reviews, you can make a report to the ACCC.
If you would like to discuss your obligations and the laws, including all your consumer law obligations, with our team of professional business lawyers, please contact us at 1300 80 67 80.