Many of the most innovative businesses of this century are online platforms – think Uber and AirBnB. What they represent is one of the most notable cultural and economic changes in recent years – the move away from seeking to own an asset, to shared use.
Sharing platforms heavily rely on customer ratings and reviews to build their reputation and maintain their integrity. The Australian Competition & Consumer Commission (ACCC) has released a guide to help platform operators comply with their competition and consumer law obligations. It provides guidance on many aspects of running an online platform, including regarding ratings and reviews. We explore some key takeaways from the ACCC’s guide and provide some practical tips moving forward.
What is an Online Platform?
Online platforms are marketplaces connecting suppliers of goods and services with consumers. The platform operator will usually provide administrative functions, including to facilitate communication, bookings and payment. It is increasingly common for online platforms to include peer ratings and reviews.
What Laws Apply?
The Australian Consumer Law (ACL) applies to online platforms and regulates unfair contract terms and unconscionable conduct. Mandatory consumer guarantee provisions also apply to the platform itself, as well as between the buyer and seller.
How Do Ratings and Reviews Operate?
Many platforms permit users to rate the service provider or the supplier of goods and leave a review. However, online reviews raise several concerns, including:
- How can the market operator ensure that the ratings and reviews are accurate?
- How can ratings be checked?
- How can the market operator determine whether the bad review is genuine, or unfairly left by a disgruntled customer, or even a fake review by a competitor?
ACCC Principles for Platform Operators
The ACCC believes that consumers only read a small number of reviews before making a decision and that the overall aggregated rating is hugely influential. The ACCC has set out four principles to promote compliance and best practice for online platform operators, namely:
- Accuracy and honesty;
- Effective review processes; and
- Fairness in dealings with consumers and traders
How Do Platform Operators Translate These Principles to Action?
Platform operators should disclose to users how they compile ratings, including whether the final rating is an aggregate of several different ratings.
Accuracy and Honesty
Platform operators need to implement measures to help ensure that ratings are accurate and honest.
Effective Review Processes
Platforms commonly use reviews as a means of quality control. The onus is on the platform operators to make sure that statements about the review process are accurate.
Fairness in Dealings With Consumers and Traders
Both the providers of goods and services on online platforms, and the consumers who hire or purchase the goods and services, depend on the honesty and integrity of the platform operators and place trust in the platform operators.
Key Tips Regarding the Use of Ratings and Reviews
Platform operators should:
- Consider allowing both sides of the transaction to rate and review each other. This feature helps to address the possible imbalance of power between the provider and customer and adds much transparency;
- Disclose how the review processes operate including how the platform calculates aggregate scores;
- Take active steps to locate and delete, and prevent, fake reviews; and
- Display the total number of reviews that the online platform has used in calculating the average rating (if the platform is using average ratings).
Platform operators should not:
- Permit or engage in conduct that manipulates ratings;
- Permit providers to offer incentives (e.g. discounts) for positive or high ratings;
- Publish reviews that they consider are fake; and
- Fail to monitor fake reviews.
How Can a Platform Operator Identify Fake Reviews?
Platform operators should look out for:
- A surge in reviews about one provider;
- Reviews that use similar language to other reviews, and/or comment on the same items or issues;
- Reviews that are from the same email or IP address as another review for that same trader or consumer;
- Reviews that use marketing terminology, or are written in an overly positive tone;
- Reviews that are written in an overly negative tone and recommends going to another product or service provider.
The legal risk is that the reviewer may be guilty of misleading or deceptive conduct for writing a false review, and the platform operator may be guilty of misleading or deceptive conduct for publishing it.
Can the Platform Operator Simply Disclaim Liability?
It is not sufficient to simply disclaim in the terms or conditions that the platform operator does not moderate reviews. This practice is not a defence to the issue of possible misleading reviews, ratings and impressions.
Misleading or deceptive conduct can apply without the online platform having the intention of doing so. The platform should put in place proper policies and processes to detect and remove reviews which are capable of misleading or deceiving.
If you have any questions about your obligations as a platform operator or need assistance drafting a review policy, get in touch with our consumer lawyers on 1300 544 755.