It’s a safe guess that consumers the world over puzzle about how they shopped before the internet. Today, a person can type a word or two into a search engine and find information about almost any product or service. Even better, you can know what others thought of it. Unsurprisingly, in this context, many business owners have wondered: ‘Can I pay a customer for a five-star rating?’ If that thought has ever crossed your mind, this article outlines the legal position regarding online consumer reviews like star ratings.
Online Reviews and the Law
The Competition and Consumer Act 2010 (CCA) and the Australian Consumer Law (ACL) are the relevant statutes regarding online consumer reviews of products and services. The Australian Competition and Consumer Commission, who enforces them, recognises that online reviews like star ratings have a substantial impact on the decisions of consumers.
The ACCC’s position regarding online reviews can be summed up in a sentence: all reviews must be genuine and independent so as to assist consumers in making purchasing decisions.
A review will be considered fake and misleading if it was written by:
- The reviewed business itself;
- A competitor of the reviewed business;
- An individual paid to write review who has not used the product; or
- A person who has used the product but who has written an inflated review for a financial or non-financial benefit.
In short, a business owner cannot pay a customer for a five star rating. The review would be inflated and written for a financial benefit. A business owner who does pay for a 5 Star Rating is likely to have breached both the CCA and the ACL due to the misleading conduct of the rating. In this scenario, the ACCC would be empowered to take formal action against the business. Action by the ACCC could be costly. The adverse publicity attendant on such action is also likely to harm the business’ reputation.
Offering Incentives for Reviews
A business is still able to provide incentives to encourage its customers to write reviews. A business must do so carefully, recognising the potential for an inadvertent breach of the CCA and ACL and with a healthy respect for the ends of the legislation itself.
The ACCC has produced some helpful guidance for businesses who are considering offering incentives for reviews. A business owner can download a copy of the booklet What you need to know about: Online Reviews A guide for businesses and review platforms from the ACCC website. The site also provides short information sheets on the issue.
The ACCC recommends that businesses offer incentives in exchange for reviews only in certain circumstances. These circumstances include:
- The incentive must be offered equally to customers likely to be complimentary of the business as to those who are likely to be critical. All reviews must be treated equally regardless of whether it is positive or negative.
- A business must always inform the consumer that the incentive is available to them irrespective of the content of their review. The incentive must be accessible to the consumer whether their review is positive or negative.
- A business must prominently disclose details of the incentive to consumers who rely on the views affected by the incentives. If you are publishing the reviews on a professional review platform, the ACCC recommends that a business notifies the platform and inform them of the specifics of your incentive. The platform can then make the appropriate disclosure to website users.
The booklet produced by the ACCC provides examples of incentive offers that are and are not best practice. Remember that the essential words are transparency and honesty. Never act in a way that could mislead consumers.
If you are considering incentivised reviews, it is an excellent idea to speak with a legal professional. Their advice and guidance can avoid difficulties later. Also, thoroughly read the ACCC website Contact LegalVision’s Advertising, Consumer and Marketing lawyers to assist you. Questions? Call us on 1300 544 755.
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