In the past, companies used eye-catching billboards and funny TV ads to sell products or services. However, social media and online review websites have redefined ‘word of mouth’ advertising. It’s important that companies do not mislead consumers on these platforms. The Federal Court highlighted this in the case ACCC v Meriton Property Services Pty Ltd [2017] FCA 1305 (ACCC v Meriton). In this case, the Australian Competition and Consumer Commission (ACCC) argued that Meriton had interfered with TripAdvisor’s property ranking and rating system and so misled consumers.

TripAdvisor’s Algorithm

TripAdvisor ranks accommodation providers based on customer reviews. They do this with an algorithm that compares a hotel’s reviews in terms of:

  • quality;
  • recency; and
  • quantity.

However, once hotels found out how this algorithm worked, some came up with ways to skew their rank.

Meriton’s Business Practices

Meriton is a company operating serviced apartments and hotels. Meriton subscribed to TripAdvisor’s ‘Express Review’ service. This service involved Meriton providing TripAdvisor with the guests’ emails. TripAdvisor would then contact the guests, asking them to review Meriton through their Facebook or TripAdvisor account.

According to TripAdvisor, the ‘Express Review’ service increased the number of reviews the platform received by 33%. This increase was enough to alter a service provider’s ranking if they consistently interfered with the information provided to TripAdvisor.

The ‘Email Masking Practice’

First, Meriton altered the email addresses of guests. Meriton’s staff would add the letters “MSA” to the email addresses of customers who were likely to have had a negative experience. For example, those who had complained. This meant that the email sent by TripAdvisor would not be delivered, preventing the customer from leaving a review.

The ‘Bulk Withholding Practice’

Apartment and hotel managers would, with management’s approval, remove the emails of guests who had stayed during a major service disruption. Examples of these disruptions included:

  • lifts being out of service;
  • phone lines not working;
  • no available power or hot water for guests;
  • evacuations because of gas line damage; and
  • excessive noise from construction.

All levels of Meriton’s management knew of the practices and were instructed to implement them routinely.

 

Meriton’s Action Result of Action
Meriton reduced the number of negative reviews. This created an impression that there were a greater number of positive reviews than negative reviews.
Meriton removed negative reviews that identified a major service disruption. This prevented potential customers from taking into consideration the possibility of a major service disruption. It also deceived customers into thinking Meriton managed its properties in a manner which did not lead to major service disruptions.
Meriton affected its TripAdvisor ranking. It did this by limiting the negative reviews that TripAdvisor’s algorithm could draw upon.

If Meriton had not withheld and masked guests’ emails, the properties’ rankings would likely have been lower. This would have provided a more negative impression for potential customers.

 

Meriton’s Breach of the Australian Consumer Law (ACL)

The Federal Court found that Meriton’s actions contravened the ACL, which protects consumers from misleading or deceptive conduct. The Federal Court reminded companies that even if methods of brand endorsement change, you must not lead customers astray about the standard and nature of your services.

Key Takeaways

Online review platforms are likely to attract further attention from regulators. Importantly, you cannot mislead or deceive consumers.

‘Getting your name out there’ used to mean quirky advertising and snappy slogans. Now, consumers, enabled by online review platforms, are the driving force behind commercial reputations. Therefore, ACCC v Meriton is a word of warning for companies relying on online reviews.

If you need advice on managing your online reputation, please contact LegalVision’s advertising compliance lawyers on 1300 544 755 or by filling out the form on this page.

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