Many businesses advertise goods using positive customer reviews and testimonials. Consumers when deciding whether or not to purchase a good or service from a business often rely on someone else who has already tried the product. Reviews and testimonials must then be independent and genuine, and businesses must take steps to ensure that they are not misleading, deceptive or false in any way. Below, we set out how to effectively and legally use a review or testimonial, as well as the consequences for posting a misleading online review.
Methods of Use
Businesses can publish reviews and testimonials they have received from customers on their websites, Facebook pages or other advertising mediums. We all can attest to seeing testimonials on our television screens from people who have allegedly tried weight loss shakes, detoxes, fitness equipment and blenders. Especially in the health industry, ‘before’ and ‘after’ pictures can be very persuasive to convince consumers to purchase a product.
Reviews and testimonials are often posted on review websites about businesses, and can act as a directory assisting consumers in deciding what is the right product or service for them. Some familiar examples include TripAdvisor and CNET.
Businesses must keep in mind that all reviews and testimonials should reflect the genuine opinion of the person providing the review.
A business will breach the Australian Consumer Law (ACL) if it misrepresents a customer’s opinion, or uses fake reviews to promote their business dishonestly. The same goes for businesses who try to cause detriment to their competitors by creating fake negative reviews, or who try to persuade their customers to provide a positive review.
A business will also breach the ACL if it removes or edits negative reviews purely to protect themselves from bad publicity.
It’s Not That Hard: AMI Nasal Spray
We can find a memorable example of a business falling foul of the ACL in Australian Competition and Consumer Commission (ACCC) v Advanced Medical Institute Pty Limited (AMI) (No 3)  FCA 1066.
AMI was a business that created nasal sprays used to treat impotence or erectile dysfunction. They took out an advertisement in a newspaper that included former game show host, Ian Turpie, best known for hosting The New Price Is Right. In the ads, Turpie was depicted as stating that his impotence had “nearly ruined his life” until AMI successfully treated him. The ACCC brought an action against AMI alleging that this advertisement was misleading and deceptive because Turpie, in fact, did not suffer from impotence, had not been treated by AMI and never made the statement. He had merely been paid to appear in the ads.
The Federal Court held that AMI’s conduct was misleading and deceptive, and ordered AMI pay the ACCC’s legal costs and make a public statement.
Don’t Be Sensitive About It: Allergy Pathway and Third Party Testimonials
The case of Australian Competition and Consumer Commission (ACCC) v Allergy Pathway Pty Ltd (No 2) (2011) 192 FCR 34) highlights the need for businesses to be careful of third-party testimonials posted on their websites or social media pages. Here, the court considered whether Allergy Pathway was responsible for third-party testimonials and whether they had ‘published’ the statements by having them on their Facebook page.
The court held that merely facilitating the misleading statements will not result in breaching the ACL. However, a business could be liable if they were aware the third-party published the material, and accepted general responsibility for its publication. In this instance, Allergy Pathway knew that individuals had posted false testimonials on their Facebook and Twitter pages but did nothing to remove them, and so were held accountable.
The takeaway message is that businesses need to be very careful that any reviews or testimonials are genuine, and accurately reflect the views of the person giving them. They will also fall foul of the ACL if they remove any negative reviews unless they are clearly offensive or untrue.
Businesses also can be held responsible for the actions of individuals on their social media pages, and need to monitor these mediums on a regular basis to remove any material capable of offending the ACL or other such advertising regulations.
Questions? Get in touch with LegalVision’s advertising and consumers lawyers on 1300 544 755.
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