Online review websites and the ACCC

Posted by Paul Jeffreys and Paul Kallenbach

Have you ever shopped online and found it difficult to choose between by a myriad of products?  With more than 50% of Australians now buying online, consumers increasingly do not have the chance to physically inspect the good they are interested in purchasing, or to communicate directly with prospective service providers.  So they are increasingly looking to online reviews to help them decide which way to turn.

Online review platforms are websites or apps that provide information to prospective purchasers about particular goods or services. The platforms may be found on independent review websites (think tripadvisor.com, urbanspoon.com and yelp.com.au) or sections of other websites that contain product reviews (such as amazon.com).  These platforms offer a compelling proposition - customers have the opportunity to become better informed about goods and services, while businesses obtain free access to market feedback.  It is increasingly apparent, however, that the information contained on review websites is not always reliable.  This has started to cause legal consternation, particularly in the social media sphere, where business are required to take steps to ensure that their online presence does not contain misleading or inaccurate content (see our previous blog post on this topic here).

The issue of misleading material on online review platforms has caught the attention of the Australian Competition and Consumer Commission (ACCC), which recently released a guidance report on how businesses should deal with the challenges of potential misleading information on review platforms. The ACCC, as the regulator of Australia's consumer laws, has powers under the Australian Consumer Law (ACL) to take enforcement action in respect of misleading conduct in trade or commerce.   The ACCC has, of course, taken on the issue of misleading online content before:

• In July 2010, Jetplace Pty Ltd, the operator of an adult social networking and dating site known as 'redhotpie', was found to have engaged in misleading and deceptive conduct by generating 1,300 fake user profiles programmed to automatically send customised messages to other (real) members.[1] This was despite the website clearly stating that 'each and every profile you see on our website was place by a person just like you – someone who came to our site and registered'.
• In February 2011, the ACCC successfully prosecuted Allergy Pathway, an operator of clinics for the diagnosis and treatment of allergies, and its sole director, in relation to misleading third party content posted on Allergy Pathway's Facebook page, on the basis that it had become aware of that content but had chosen not to do anything about it.[2]
• In November 2011, removalist business Citymove paid a $6,600 infringement notice after admitting that it had posted testimonials on its own website purporting to be genuine customers.[3]
• In January 2014, P & N Pty Ltd and P & N NSW Pty Ltd (Euro Solar) and Worldwide Energy and Manufacturing Pty Ltd (Australian Solar Panel), manufacturers and suppliers of solar panels, were ordered to pay collective pecuniary penalties of $125,000 for, amongst other things, publishing fake online testimonials.[4]

These cases indicate the caution that businesses need to exercise, both in terms of the content they post on their own website or social media channels, and also in dealing with third party content on those channels (including the expectation, set by the Federal Court, that businesses must promptly remove misleading third party content of which they become aware).  The guidance report issued by the ACCC signifies a further escalation in the battle against misleading online content.

The ACCC report highlights five areas that independent online review platforms should consider:

(i) Disclosing commercial arrangements with reviewed businesses: Where commercial relationships exist between review platforms and reviewed businesses, the review platform risks breaching the ACL if it does not disclose to customers the nature of the relationship. The guidance report provides the example of the platform prominently stating that '[Review platform] receives a commission/fee for each purchase from [reviewed business] booked through this site'.

(ii) Detecting and removing fake consumer reviews: The guidance report recommends that review platforms tackle fake reviews by providing customers the opportunity to complain about or 'flag' potentially suspect reviews in addition to conducting either automated or manual internal reviews of content. The report provides factors to consider in deciding whether a review may contain fake material, including where a review uses overly positive of 'marketing-speak' and whether there has been a 'spike' in reviews about a particular business over a limited period of time.

(iii) Incentivised consumer reviews: Where an online review platform offers an incentive for users to conduct a review of a particular good or service, the platform should disclose this prominently to users (e.g. next to an aggregate (average) rating out of five or above posted comments). The guidance report provides the example of the following disclosure example: 'Some/all reviewers of [reviewed business] received a voucher [or other benefit] from [review platform] in exchange for their review'.

(iv) The omission of credible consumer reviews, inflated (average) reviews and the 'big picture': The report warns against the creation of a misleading overall impression by a body of reviews (e.g. where a platform selectively removes or edits negative reviews). It is also recommended that where a platform displays an aggregated (average) rating system, the total number of reviews should be also stated (to give customers an understanding of the sample size).

(v) Dealing with businesses who have received unfavourable reviews on your platform: The report recommends that reviewed business be provided with an opportunity to post a public response to negative reviews.

The report provides similar recommendations to businesses hosting their own review platforms. In particular, the ACCC warns against anybody writing reviews when they have not experienced the product themselves. This includes, in the words of the ACCC, to 'not encourage family and friends to write about your business without disclosing their personal connection with your business in that review'.

With online shopping becoming more central to consumers, the ACCC has increased exposure on the issue of misleading online product reviews.   Hosts of independent online review platforms and any businesses with review platforms on their websites need to be aware of risk mitigation strategies necessary to ensure that they are not breaching consumer protection laws.

 

[1] Australian Competition and Consumer Commission v Jetplace Pty Ltd [2010] FCA 759.

[2] Australian Competition and Consumer Commission v Allergy Pathway Pty Ltd (No 2) [2011] FCA 74.
[3] http://www.accc.gov.au/media-release/accc-removalist-admits-publishing-false-testimonials.
[4] http://www.accc.gov.au/media-release/145000-penalty-for-fake-testimonials-and-false-solar-energy-country-of-origin-representations.