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Have you considered posting a good review for your product or service to boost your sales? Or paying someone else to leave a testimonial? Before you do, it’s important you understand the consequences that may flow from a fraudulent review. Amazon recently filed three new lawsuits against various sellers from the US and EU for posting fake reviews. The e-commerce giant says they have evidence that sellers have abused their customer review process by creating fake accounts to leave positive reviews for their products. These lawsuits are in addition to the 1,000+ defendants that Amazon has sued in its effort to combat fake reviews.

So, is it ever okay to compensate someone to review your product? When is it misleading? If you run an online business, what’s the best way to manage your online reviews? We explore the legal regulations and potential consequences of online reviews below.

What Does the Law Say?

The primary danger with online reviews is inadvertently engaging in misleading or deceptive conduct, and breaching the Australian Consumer Law (ACL). Section 18 of the ACL states that businesses cannot engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

Online reviews are meant to accurately reflect the genuine opinions of consumers who have submitted their thoughts and feedback, after having tried your product and/or service. 

If someone posts a fake review of your product or service, it is your responsibility to remove the review. If you fail to remove the review, you run the risk of breaching the ACL. Sellers should look for reviews that are posted from the same email account, written in a similar tone or style or are written in overly positive or ‘marketing’ speak. Selectively removing or editing reviews (especially negative reviews) can also be misleading and deceptive conduct.

When is it Misleading?

Paid reviews

It’s tempting for new businesses who have not yet gained a strong following to pay someone to leave a review. There are even websites where individuals online sell fake review services (for example, Amazon has sued the site Fiverr.com for this service). However, the ACCC has stated if a seller or business compensates a reviewer, it will be misleading if:

  • the reviewer has not used the product;
  • the reviewer has used the product but has inflated the review to make the product sound better than it is.

Other types of misleading reviews

The ACCC has issued guidelines about misleading online reviews, including:

  • family and friends who write about a product or service without disclosing their personal connection;
  • reviews presented as impartial but that the reviewed business of a competitor wrote; or
  • reviews written by those who had not used the product.

In 2011, the company Citymove Pty Ltd was penalised $6,600 for publishing fake reviews on their site. The reviews had been copied from another site, altered slightly and posted on Citymove’s website. The ACCC, who brought the claim, used the case to emphasise that reviews used to promote a business must be genuine.

Tips to Avoid Misleading Reviews

When can you pay someone to review your product? Can you send someone a free copy of your cookbook so they can post a review on their blog? Businesses often offer financial and non-financial incentives to people to write reviews about their goods or services. We’ve set out three key tips below to avoid misleading consumers in the process of leaving a review. 

  1. The reviewer should be told to disclose the commercial relationship in their review (for example, stating that they have been paid to write this review, or using the hashtag #sponsored or #paidpost if posting a review on Instagram).
  2. Make sure incentives, monetary or otherwise, are offered equally to consumers who are likely to write good reviews and consumers who are likely to be critical.
  3. The reviewer who you offer the incentive to should be told that they will receive the incentive whether the resulting review is positive or negative.

Key Takeaways

Reviews are a great way to get exposure for your business, and good reviews can boost sales as well as consumer sentiment towards your brand. However, attempting to fast-track sales by posting fake reviews or paying others to write positive reviews for you online will breach consumer law as well as damaging your brand’s reputation. The key to managing online reviews is to ensure they are honest and genuine. If you want to offer incentives to people to write reviews, make sure that the reviewer appropriately discloses any payment and that you publish reviews that are both positive and negative.

If you have any questions about online reviews or need assistance drafting a review policy for your online business, get in touch with our consumer lawyers on 1300 544 755.

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