Summary
- Businesses cannot take legal action against a genuinely held, truthful negative review, but may have grounds to act where a review is defamatory, constitutes injurious falsehood, or involves misleading and deceptive conduct under the Australian Consumer Law.
- A defamation claim requires proof that the review was published, identified the business or an employee, and damaged their reputation, though businesses with ten or more employees cannot bring a defamation claim in respect of reviews that target the business itself rather than an individual employee.
- Where a competitor has written or paid for a false negative review, a complaint to the ACCC may be appropriate, as such conduct can constitute misleading or deceptive conduct under the Australian Consumer Law and may attract significant penalties.
- This article is a plain-English guide to legal options for responding to negative online reviews for business owners operating in Australia, produced by LegalVision, a commercial law firm.
- LegalVision specialises in advising clients on defamation, consumer law, and commercial disputes.
Tips for Businesses
Before pursuing legal action, attempt to resolve the issue directly by responding publicly to the review and contacting the customer. Report false or offensive reviews to the platform for removal. Only escalate to legal action where the review is demonstrably false, malicious, or part of a coordinated competitor campaign.
Online reviews can make or break a business, and a false or malicious review can cause real financial harm. As a business owner, you have legal options when a bad review crosses the line from honest opinion into defamation, injurious falsehood, or misleading conduct. This article will detail the options you have when someone leaves a bad review online.
What Steps Should I Immediately Take?
Before initiating any legal action, you should take steps to determine the identity of the person who posted the review and confirm that they were a customer of yours. If you have confirmed that the person was a customer, you should take the following steps:
- comment on the review addressing their concerns;
- if the review is untrue or offensive, you could report the review to the platform and request they have it removed; and
- if it is appropriate, you could contact the customer and provide them with a refund or make some attempt to make amends.
Defamation Claim
To show the online review is defamatory, you must prove that the review is false and negatively affects your business or employee’s reputation.
The elements that need to be established for a defamation claim include that the defamatory review:
- was published and made available to another person or to the public;
- identifies or is about your business or employee; and
- is, in fact, defamatory, meaning that it hurt your business’ reputation.
If the online review identifies and defames an employee, it is likely that you can bring a claim against the reviewer for defamation. However, if the review defames your business, you can only bring a claim against the reviewer if you have fewer than ten employees.
If they can prove that their review is substantially true, they might have a defamation defence. Courts may consider defamatory material to be true if the reviewer can prove that their negative review’s ‘gist’ is true.
If the reviewer was merely expressing their opinion, they might have a defence to a claim of defamation. To rely on the defence of honest opinion, they would have to show it was:
- obvious to the third party or audience that they were merely expressing their opinion. For example, they thought the food at your restaurant was overpriced and the steak was overcooked;
- a matter which is in the public’s interest. For example, you were commenting on a high profile business person; and
- based on ‘proper material’, meaning their opinion was based on substantially true material. For example, if they watched a movie and commented their thoughts on the film.
However, you could challenge their defence by proving that they did not honestly hold that opinion when they published the review.
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Injurious Falsehood Claim
If your business has suffered actual financial damage as a result of false statements in an online review, they may bring a claim of injurious falsehood. The key elements of injurious falsehood are that:
- someone makes a false statement about the business’ goods or business;
- the statement was published to a third party;
- there must be malice on the part of the reviewer; and
- you must show actual damage as a direct result of the statement.
Australian Consumer Law Claim
If you discover that a competitor has published a negative review about your business or, has paid someone to, you may claim the competing business for misleading or deceptive conduct under the Australian Consumer Law (ACL). If you suspect that a competitor has written, encouraged another person to write or paid someone else to write a bad online review, you may consider complaining to the ACCC. Regulators do not wish to see businesses use legitimate online consumer forums to unfairly discredit competitors and deceive consumers. If a court finds they have breached the ACL, they may face penalties for engaging in misleading or deceptive conduct.
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Key Takeaways
Online reviews are vital to a business’ success, so bad or negative reviews can cause serious financial damage. You may be able to take legal action if the bad online review is:
- defamatory;
- considered injurious falsehood; or
- misleading or deceptive.
If you are concerned about a negative online review and want to understand the action you can take, LegalVision provides ongoing legal support for businesses through our fixed-fee legal membership. Our experienced dispute resolution lawyers help businesses manage contracts, employment law, disputes, intellectual property, and more, with unlimited access to specialist lawyers for a fixed monthly fee. To learn more about LegalVision’s legal membership, call 1300 544 755 or visit our membership page.
Frequently Asked Questions
The elements that need to be established for a defamation claim include that the defamatory review was published and made available to another person or to the public; identifies or is about your business or employee; and is, in fact, defamatory, meaning that it hurt your business’ reputation.
The key elements of injurious falsehood are that someone makes a false statement about the business’ goods or business, the statement was published to a third party, there must be malice on the part of the reviewer and you must show actual damage as a direct result of the statement.
If you discover that a competitor has published a negative review about your business or, has paid someone to, you may claim the competing business for misleading or deceptive conduct under the Australian Consumer Law (ACL).
No. If a review reflects a customer’s honest opinion and is truthful, you cannot take legal action. Legal options only arise when a review is defamatory, constitutes injurious falsehood, or involves misleading and deceptive conduct under the Australian Consumer Law.
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