Whoever remarked that ‘all publicity is good publicity’ had apparently never considered a bad review. In an increasingly interconnected world, bad reviews can severely impact your business. Many people are unsure what if any, avenues they have against the reviewer. Below, we explain what rights proprietors have against someone leaving a bad review of their business online.

The Law and Bad Reviews

The law does not intervene if a consumer leaves a bad online review that legitimately expresses their experience with a business. In this instance, you should acknowledge the reviewer taking the time to leave his or her comment, and respond to their concerns in a private message.

Competitors, however, may sometimes maliciously leave a poor review discrediting the business. Other reviewers may have a personal grudge against the owner. In these instances, if an individual or business leaves a dishonest or fabricated online review, they may have breached Australian consumer law. Further, a review motivated by personal vendetta could constitute defamation. Before initiating any action, a business owner should take steps to know the identity of who posted the review and in what circumstances.

Australian Consumer Law

Schedule 2 of the Competition and Consumer Act 2010 (Cth) contains the Australian Consumer Law (ACL) that protects consumers in a marketplace characterised by power imbalances. It also provides a framework for business to understand their obligations and best practice. The Australian Competition and Consumer Commission (ACCC) regulates this area of law.

A competitor cannot write or pay someone else to write a bad online review. If they do, they have made a seemingly impartial review that can mislead consumers and as such, may be liable for misleading and deceptive conduct. They have breached their obligations under the ACL and may face penalties. Indeed, even the publicity surrounding the ACCC’s investigation can be harmful to the business.

If you own a business and suspect that a competitor has written, encouraged another person to write or paid someone else to write a bad online review, you should lodge a complaint to the ACCC. Importantly, regulators do not wish to see businesses use legitimate online consumer forums to unfairly discredit competitors and deceive consumers.

Defamation

More seriously, a bad online review can sometimes constitute defamation. These reviews can be online or in some other format such as a defamatory social media post.

A review is only defamatory if it is written specifically to damage a business. A business owner must prove that the review does not accurately reflect the viewpoint of the author.

If your business has suffered a bad online review and you have less than ten employees, you can take action under the relevant state or territory defamation legislation. You must demonstrate that the review:

  • Damaged your public reputation;
  • Was published to at least one other person; and
  • Identified your business.

You will need to prove that the review is not rooted in real experience and was motivated by malice.

The US v Australia

Businesses can only pursue a reviewer where the review is dishonest or defamatory – they have no legal redress if the bad review is legitimate and made honestly.

Unlike the US, Australian businesses cannot (and shouldn’t) employ ‘strategic lawsuits against public participation’ or ‘gag clauses’. The first technique involves companies taking legal action against a consumer for a bad review simply to dissuade other consumers. The second requires businesses introducing clauses in their terms and conditions whereby a consumer unwittingly agrees not to criticise that business. If they subsequently pen a bad review, they are liable to pay the business a specified sum.

Such was the concern in the United States that Congress enacted the Consumer Review Freedom Act 2015. The Act statutorily voids such clauses. In Australia, these techniques are a likely abuse of process and unconscionable conduct.

***

If you have received a bad online review and are unsure how to respond, get in touch with our consumer lawyers on 1300 544 755,

Carole Hemingway

Next Steps

If you would like further information on any of the topics mentioned in this article, please get in touch using the form on this page.