The Australian Competition and Consumer Commission (ACCC) are investigating the legitimacy of customer reviews for “sharing economy” companies, such as Uber and Airbnb. Consumers are increasingly reliant on reviews, and so the consumer watchdog is making sure that these platforms have the appropriate policies in place to regulate their use.

The Sharing Economy

The sharing economy is disrupting traditional businesses with customers relying more heavily on user reviews. The accessibility, convenience and popularity of sharing platforms make it easy to submit a review, but 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. People trowel through reviews to make sure 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.

So, unsurprisingly, consumer protection issues are commonly raised in the context of the sharing economy.

Enforcing Consumer Protection

The Australian Consumer Law (ACL) protects consumers from any rogue business, 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 the ACL. The ACCC has identified three clear guidelines for businesses handling online reviews and testimonials:

  • Be transparent about commercial relationships and don’t 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. The onus is on the business to determine what policies and regulations should be administered to make their platform trustworthy.

Why Target the Sharing Economy?

Uber and Airbnb and prime examples of innovation and entrepreneurship, both of 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. For this reason, the ACCC has 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 and marketing professionals, and digital influencers. The sharing economy has opened up new and unfamiliar ways to collect and publish reviews. Therefore, the ACCC warns businesses which fall under the category of review administrators (e.g. Uber and Airbnb), that they must  comply with both the ACL and the ICPEN guidelines.

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 an infringement notice and Citymove was forced to pay penalties of $30,600 for breaching section 29(1)(e) of the ACL, which prohibits making false testimonials.

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 can issue an infringement notice where it reasonably believes a business has contravened the relevant consumer protection laws.

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The ACL, together with the ICPEN guidelines, will direct the ACCC in their investigation into Uber and Airbnb to ensure that consumers can continue to rely on authentic and trustworthy reviews. If you have any questions about your obligations under the ACL, get in touch with our consumer lawyers on 1300 544 755. 

Alexandra Shaw

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