When marketing your business, whether online or through traditional mediums, you must ensure you comply with the law to avoid costly penalties. Below, we set out the legal framework that governs the marketing efforts of businesses and agencies, focusing in particular on online reviews.
Consumer Law and Advertising
The Australian Consumer Law (Cth) (the ‘ACL’) requires all Australian businesses to engage in honest advertising and marketing practices. The Australian Competition and Consumer Commission enforces the ACL and can take action against any enterprise that breaches their consumer law obligations regarding marketing. Advertisers and marketers must ensure that the overall impression an ad creates is not inaccurate, misleading or false. A business must always be able to substantiate any claim it makes in their advertising.
Online marketing is subject to the same legal rules and obligations as offline advertisements. One of the most frequent ways in which businesses breach their obligations when marketing online is through posting misleading reviews of their products or services on review platforms or their website.
The ACCC only considers an online review as genuine if it is independent and written by a consumer with personal experience of a business’ products or services. They are genuine because they can assist consumers to make informed purchasing decisions.
However, the ACCC considers an online review as fake if written by the following:
- The business itself;
- A competitor;
- A person paid to write the review with no personal experience of the product or service; and
- A person with personal experience of the service or product who wrote a favourable review because they received a benefit – either financial or non-financial – to do so.
Such reviews mislead consumers in that they provide an incorrect, inaccurate and biased view of a particular business.
Consumer law exists to correct as much as possible the inherent power imbalance between business and the individual in the marketplace. Fake reviews then interfere with a consumer’s ability to make an informed purchasing decision.
A business proprietor should then avoid:
- Encouraging their family and friends to review their business online without full disclosure of their personal relationship to the business owner;
- Solicit a person to write a review for their business or a competitor if they have no personal experience of their goods or services.
Further, a person should not write a review if they have no personal experience of the product or service under review. Their review cannot, and does not, reflect their genuine beliefs.
Incentives for Reviews
The ACL provides businesses with clear rules and procedures to offer incentives for online reviews rather than prohibiting the practice outright. Businesses should not provide an incentive to a consumer in exchange for a positive review. If they do so, they risk breaching the Competition and Consumer Act 2010 (Cth).
Businesses who choose to offer an incentive for an online review must do so to consumers who are likely to be critical as well as complimentary. Further, the business must expressly make it known to a reviewer that the incentive is available irrespective of the content of their review. Finally, the business must prominently disclose the incentive to all the consumers who are likely to rely on their reviews.
If a business uses a review platform and has a commercial relationship with the platform, they must disclose this to consumers. Some commercial platforms prevent the automatic uploading of negative reviews or allow the businesses to select a review to appear at the top of the page. Such practices mislead consumers because they create a more favourable impression of the business than otherwise warranted.
Similarly, business or review platforms should not selectively remove or edit reviews, especially critical reviews so as to skew the overall impression and mislead consumers. If an enterprise wishes to use a commercial platform to post their online reviews, they should choose a platform that clearly discloses its policies regarding removal and publication of consumer content.
If you have any questions regarding online marketing laws or how online reviews work, get in touch with our consumer lawyers on 1300 544 755.