Don’t believe the hype: Online ratings and reviews under the microscope

Online ratings and reviews are perceived as a low cost, transparent and real-time way for consumers to make informed purchasing decisions and can therefore be highly influential. Over the past year, there have been a number of enforcement actions successfully brought by the ACCC for businesses manipulating reviews or ratings that appear on their website, or third party review platforms. There has been much media focus on online ratings and reviews both in Australia and internationally, including the well-publicised example of a ‘fake restaurant’ being the number 1 ranked restaurant in London on a major review platform.

As an area of on-going monitoring and enforcement, businesses and review platforms should actively monitor their online presence and ensure their reviews or ratings accurately reflect genuine and independent customer experiences.

Enforcement Actions

In the recent cases brought by the ACCC, courts have found the following conduct to be (or likely to be) misleading and deceptive, in contravention of section 18 of the Australian Consumer Law (ACL):

  • taking active steps to prevent certain customers (e.g. those who have made a complaint) from posting potentially negative reviews, by deliberately adding additional letters into customer email addresses and/or not forwarding customer email addresses to independent review platforms. This conduct has the effect of artificially inflating the ratings for businesses on the respective review platforms; and
  • service providers completing their own template reviews (including a star rating) and sending them to customers for approval, which are automatically published online if the customer does not respond within three days. In one case, the ACCC noted that at least 80% of the reviews were not written or approved by customers.

Significant pecuniary penalties were awarded in these instances. For corporations, breaches of the ACL can attract penalties of up to AUD$500,000 for individuals, and the greater of AUD$10 million, three times the value of the benefit gained (and attributable to the offence), or if the benefit cannot be calculated, 10% of turnover for the preceding 12 months.

Key Take-aways

The ACCC has issued the following guidance for businesses managing online reviews and ratings:

  • be transparent about commercial relationships – businesses should be open with consumers about commercial relationships with review platforms, which impact or have the potential to impact reviews and ratings e.g. notices on the review platforms that state this relationship;
  • do not post or publish misleading reviews – reviews should not be presented as being impartial, where they have been written by the reviewed business, a competitor of the reviewed business, a third party on behalf of the business or competitor, a third party paid to write the review without having used the product, or a product user that has been given a financial or non-financial incentive to write the review (unless the sponsorship is clearly stated);
  • omission or editing of reviews may be misleading – the overall impression from a body of reviews should reflect the opinions of reviewers. The removal or editing of reviews or ratings, particularly for negative reviews, may be misleading.

The ACCC has also indicated that both reviewed businesses and review platforms are responsible for monitoring reviews and ratings to ensure that they are not misleading or deceptive.

For further guidance and/or information on online reviews and ratings, see the ACCC website at this link.

This post was prepared by Luke Bardas (Solicitor), Valiant Warzecha, Nicholas Boyle (Senior Associate) and Melinda Upton.