Reading time: 5 minutes

Customers increasingly depend on online reviews to guide their buying decisions. Accordingly, some businesses are tempted to engage in misleading practices such as manipulating, faking or paying for reviews.

In response, the Australian Consumer and Competition Commission (ACCC) now monitors how businesses acquire online reviews. The ACCC has also released an online review guide for both businesses and review platforms.

If you are a business operator, you should understand the extent to which you can solicit or encourage reviews. If you manage a review platform, you should be aware of the potential for users to manipulate reviews.

Manipulated Online Reviews

In November 2016, the ACCC took action against Meriton Property Services Pty Ltd (Meriton) alleging that Meriton engaged in misleading and deceptive conduct. Meriton attempted to manipulate reviews of its properties on the TripAdvisor website by reducing the likelihood of users posting negative reviews.

TripAdvisor is a platform for travelers to post reviews and share their experiences through a star rating system and comment box. TripAdvisor also offers a service to businesses called ‘Review Express’ where the hotel supplies the review site with a list of their guests with contact details and TripAdvisor emails the guests to encourage them to leave reviews on the site.

The ACCC alleged that Meriton manipulated the guest information it provided to TripAdvisor to reduce the likelihood of negative reviews and raise the average rating of the properties. In particular, during a period where there were problems with the property such as broken lifts and a lack of hot water, the ACCC alleged that Meriton provided unusable contact details to TripAdvisor so that affected customers would not receive emails prompting them to leave a review.

Fake and Biased Reviews

Businesses should avoid asking staff, friends or selected customers to write a review of your product or service that doesn’t reflect their genuine experience. Asking staff or friends to review your products (even if they are real customers) could be misleading as they are likely to be biased in your favour.

In 2015, the ACCC took action against A Whistle & Co, a franchisor that provided cleaning services. The Court found that it had published six fabricated testimonials and asked its franchisees to post fake reviews purporting to be from legitimate customers. In doing so, the franchisees and the franchisor breached the Australian Consumer Law which states a business cannot make false or misleading representations that claim to be testimonials.

The franchisor further organised bonuses for customers and internal competitions to encourage posting reviews. The Court accepted that much of the intent behind the scheme was to increase the number of reviews overall. However, it nonetheless found that some aspects of their plan were potentially misleading. For example, movie ticket giveaways for customers who contacted them with positive feedback and an ‘operator of the month’ award that encouraged franchisees to make satisfied customers to post reviews.

The Court also found that posting a review with the purpose of using it to instruct others how to do the same was misleading.

Paid Reviews

Businesses are increasingly turning to ‘influencers’ to promote their goods. Influencers include social media personalities, sponsored blog posts and celebrity endorsements. If you pay someone to review your brand (either through cash or other benefits such as free merchandise), they must disclose that you paid for the review. For example, through hashtags such as ‘#sponsored #paidpost’.

Consumers should also be vigilant when picking a product or service based on online reviews. Read through the comments for anything that seems suspicious. For example, a sudden spike in positive reviews or multiple reviews that employ a similar tone or vocabulary.

Is a Website Liable for Hosting Fake Reviews?

If you run a marketplace where visitors can view star ratings and reviews, you should be aware of the dangers of manipulated and fake reviews. Unfortunately, it’s still unclear whether a website or platform is liable for publishing manipulated or fake ratings and reviews.

However, beyond the threat of legal action, a website that becomes known for hosting fake reviews can lose the public’s confidence. Therefore, review websites should take active steps to remove misleading and fake online reviews or report them to the ACCC.

Key Takeaways

Online reviews and ratings play an increasingly important role in consumer decision making. Accordingly, businesses seek to leverage reviews to improve their product or services’ ranking online. However, they must be careful that they don’t take steps that may mislead customers through fake reviews or incomplete disclosure.

The ACCC has shown that it will bring proceedings against businesses that make false or misleading representations through testimonials. Marketplaces and other sites hosting online reviews and ratings should be aware of these activities and implement rules that seek to restrain such behaviour. Generating terms and conditions for site users, as well as regularly monitoring use of the site, can ensure compliance with the Australian Consumer Law.

If you have questions regarding online reviews and testimonials, get in touch with LegalVision’s online lawyers by completing the form on this page, or calling 1300 544 755.

Webinars

New Kid on the Blockchain: Understanding the Proposed Laws for Crypto, NFT and Blockchain Projects

Wednesday 25 May | 10:00 - 10:45am

Online
If you operate in the crypto space, ensure you understand the Federal Government’s proposed licensing and regulation changes. Register today for our free webinar.
Register Now

How to Expand Your Business Into a Franchise

Thursday 26 May | 11:00 - 11:45am

Online
Drive rapid growth in your business by turning it into a franchise. To learn how, join our free webinar. Register today.
Register Now

Day in Court: What Happens When Your Business Goes to Court

Thursday 2 June | 11:00 - 11:45am

Online
If your business is going to court, then you need to understand the process. Our free webinar will explain.
Register Now

How to Manage a Construction Dispute

Thursday 9 June | 11:00 - 11:45am

Online
Protect your construction firm from disputes. To understand how, join our free webinar.
Register Now

Startup Financing: Venture Debt 101

Thursday 23 June | 11:00 - 11:45am

Online
Learn how venture debt can help take your startup to the next level. Register for our free webinar today.
Register Now

About LegalVision: LegalVision is a commercial law firm that provides businesses with affordable and ongoing legal assistance through our industry-first membership.

By becoming a member, you'll have an experienced legal team ready to answer your questions, draft and review your contracts, and resolve your disputes. All the legal assistance your business needs, for a low monthly fee.

Learn more about our membership

Need Legal Help? Submit an Enquiry

If you would like to get in touch with our team and learn more about how our membership can help your business, fill out the form below.

Our Awards

  • 2020 Innovation Award 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Award 2020 Employer of Choice Winner – Australasian Lawyer
  • 2020 Financial Times Award 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year Award 2021 Law Firm of the Year - Australasian Law Awards
  • 2019 Most Innovative Firm - Australasian Lawyer