In 2016, the Australian Competition and Consumer Commission (ACCC) investigated the legitimacy of customer reviews for ‘sharing economy’ companies, such as Uber and Airbnb. Consumers are increasingly reliant on reviews. Further, since platforms like Uber and Airbnb have become increasingly popular, the consumer watchdog is making sure that these platforms have the appropriate policies in place to regulate their use. This article explains what regulations apply to consumer reviews for ‘sharing economy’ companies like Uber and Airbnb.
What is the Sharing Economy?
The sharing economy is essentially a system that allows people or businesses to share access to their goods or services, usually for a fee. Additionally, platforms (like Uber and Airbnb) that enable the sharing economy usually provide administrative functions, including in relation to payment and managing peer reviews.
The sharing economy is disrupting traditional businesses as customers rely more heavily on user reviews. Indeed, the accessibility, convenience and popularity of sharing platforms make it easy to submit a review. However, it is difficult to trace or identify its legitimacy.
Uber, in particular, depends on its customers’ reviews requiring drivers to maintain a high rating to continue using their platform. Similarly, Airbnb is a platform that thrives on the testimonials of guests. Consumers consider multiple reviews to ensure that the accommodation is true to its description and photographs. As an Airbnb user, questioning the authenticity of a review defeats the essence of the platform.
Enforcing Consumer Protection
The Australian Consumer Law (ACL) protects consumers from certain conduct, namely:
- Section 18 prohibits businesses from engaging in misleading or deceptive conduct; and
- Section 29 prohibits businesses from making false representations. In particular, section 29(1)(e) and (f) prohibit making false or misleading testimonials.
This means that posting, publishing, or failing to remove fake or misleading reviews can result in a breach of ACL. The ACCC has identified three clear guidelines for businesses handling online reviews and testimonials:
- be transparent about commercial relationships. Do not allow these to influence the priority or order in which reviews are published;
- do not post or publish misleading reviews; and
- do not edit or delete unfavourable reviews.
It is the responsibility of the platform operators to ensure the authenticity of reviews to avoid misleading consumers. Therefore, the onus is on the business to determine what policies and regulations they should administer to make their platform trustworthy.
Finally, consumers who purchase goods or services on a sharing economy platform are entitled to the protections of the consumer guarantees contained in the ACL.
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Why Target the Sharing Economy?
Uber and Airbnb and prime examples of innovation and entrepreneurship. Both characteristics which are encouraged and embraced in Australia for the large benefits they provide to the economy. These platforms have indeed surpassed the startup world’s expectations, revolutionising the transport and accommodation industries. It was for this reason that the ACCC focused on the sharing economy as part of their investigation of online reviews and endorsements, as part of the International Consumer Protection and Enforcement Network (ICPEN) annual internet sweep.
The ICPEN is a network of 50 consumer protection agencies from across the world, including the ACCC. In an attempt to build confidence and trust in online reviews, the ICPEN released new guidelines for:
- review administrators;
- traders;
- marketing professionals; and
- digital influencers.
The Consequences
Breaching the ICPEN guidelines or the ACL by publishing fake or misleading reviews could attract the unwanted attention of the ACCC. In 2011, the ACCC commenced proceedings against a Sydney company, Citymove Pty Ltd, for publishing false and misleading consumer reviews on their website. As a result, the ACCC issued three infringement notices. Citymove was forced to pay penalties totalling $30,600 for making fake testimonials in breach of the ACL.
Fake or disingenuous reviews can mislead consumers into using a service or purchasing a product due to a mistaken belief of its perceived satisfactory quality. Therefore, the ACCC takes these matters seriously and may investigate and take further action. This action could include:
- issuing an infringement notice; or
- other penalty
where it reasonably believes a business has contravened the relevant consumer protection laws.
Key Takeaways
The sharing economy a system allowing people or businesses to share access to their goods or services, generally for a fee. Additionally, the sharing economy has provided new ways to collect and publish reviews. Therefore, businesses like Uber and Airbnb that are review administrators must comply the ACL and the ICPEN guidelines, or face action from the ACCC. If you have any questions about your obligations, our experienced regulatory and compliance lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
Frequently Asked Questions
It is a system that allows people or businesses to share access to their goods or services, usually for a fee. Uber and Airbnb are platforms that enable the sharing economy.
No, posting, publishing, or failing to remove fake or misleading reviews can result in a breach of the Australian Consumer Law (ACL).
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