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How Can Businesses Ensure Online Reviews Are ACL Compliant

How Can Businesses Ensure Online Reviews Are ACL Compliant

Online reviews are a valuable tool for consumers. But do your business' reviews comply with the Australian Consumer Law? Find out here.

28th March 2019
Reading Time: 3 minutes

With the age of the internet, getting access to consumer information through review has become more accessible. Fake reviews are those that do not accurately reflect the opinions of the author, compromising the integrity of other reviews. The Australian Competition and Consumer Commission (ACCC) is the authority enforcing the Competition and Consumer Act 2010 which contains the Australian Consumer Law (ACL). They enforce this law for business conduct in Australia as well as conduct outside Australia for Australian businesses. Review platforms are websites or software tools that publish reviews for consumers about goods, services and/or businesses. These intend to inform about prospective purchases for, and by everyday consumers.

Guiding principles

The ACCC has set-out 3 guiding principles that aims to guide and identify the misleading conduct of a fake review. These three principles are broken into specific actions that are misleading and misrepresentative of goods, service or businesses. Anti-competitive behaviour ranges from not disclosing a commercial relationship, to businesses writing fake negative reviews for a competitor.

Principle 1: Be transparent about commercial relationships

Commercial relationships should be made transparent because they lead to unfair competitive advantages.

Principle 2: Do not publish misleading reviews

Reviews by the reviewed business, by competing businesses, by a paid individual or third-party who has not used the product, or someone who has used the product but received some benefit are all examples of misleading the consumer.

Principle 3: Omitting or editing reviews may be misleading

Reviews that make up the overall image of a business on a review platform is misleading if it has been modified for commercial gain. This particularly means the removal or editing of negative reviews.

Disclosing Commercial Arrangements with Reviewed Businesses

Despite consumers not expecting it, commercial relationships may exist between a reviewed business and the review platform. This can be from things such as advertising agreements between the two, or what the ACCC is concerned about, the hiding or removal of negative reviews. To remedy this, there should be a prominent explanation of the nature and extent of the commercial relationship. The impact of the relationship on the review must also be disclosed; even if the relationship has no effect on the reviews, the relationship should still be disclosed for consumers. Any promoted or improved review must also be disclosed.

Incentivising Consumer Reviews

Sometimes businesses offer incentives (such as discount for a future purchase) to reviewers to motivate a review of the business, often positive. The ACCC identifies this as a potential to cause biased and anti-competitive conduct. You can fix this by:

  • offering incentives equally to consumers, whether they are likely to be positive or critical, and treating them as the same
  • expressly telling the reviewer that the incentive is available whether the review is positive or negative

Selectively asking customers for a review based on their likeliness to give a good review is misleading and deceptive under the law. In 2017, Meriton Apartments were taken to Court by the ACCC for engaging in this type of misleading conduct. Meriton invited guests to review their accommodation services through a review platform emailing service, but intentionally misspelled emails of guests who had a bad experience. Additionally, Meriton withheld bulk email addresses of guests at hotels where a fault occurred. Discovery of this led the ACCC to take action, as this conduct amounted to misrepresenting the business. This was because encouraging only positive reviews misrepresents a business as being something they’re not, therefore misleading consumers. While it seems like influencing reviews can only be through financial benefits for the consumer, it is important to realise that any behaviour dishonestly favouring your business, is misleading.

To check if your business’ communication with past consumers of your business is legal, contact a business lawyer.

Reviews Written by Businesses

As a business, writing about yourself is equally as misleading, as is writing negative reviews about a competitor. This includes solicitation of an employee of the business, a family member, friends or any third-party. It is misleading for someone to review goods, service or a business if they haven’t experienced it themselves. If a family member, friend or employee does give a review after experiencing something, they should disclose their relationship with the business and any impact it had on their review.

Penalties

Misleading a deceptive reviews is against the law. Your business may receive an Infringement Notice or have to pay a fine. Under the ACL, monetary penalties for corporations can be up to $10,000,000, three times the value of the received benefit, or 10% of annual turnover in the following 12 months. Individuals can also face fines of up to $500,000.

Conclusion

Overall, businesses wishing to comply with ACL should avoid misleading consumers. Online reviews are an important mechanism for consumers and businesses alike, but should be unbiased for the best interests of the consumer.

Unsure where to start? Contact a LawPath consultant on 1800 529 728 to learn more about customising legal documents and obtaining a fixed-fee quote from  Australia’s largest legal marketplace.

Author
Jenelle Miranda

Jenelle is a legal Intern at Lawpath as part of the Content Team. She is in her third year of a Bachelor of Law and Bachelor of Science (Physics & Astronomy) at Macquarie University.