Online reviews are a very powerful marketing tool for businesses. But did you know that many of these consumer reviews can be fake?

According to ABC News Australia 16 per cent of all reviews on Yelp, 33 per cent of all reviews on TripAdvisor and more than half in some categories on Amazon are fake.

Just last month the Federal Court ordered online tasking platform Service Seeking Pty Ltd to pay $600,000 in penalties for making false or misleading representations regarding reviews of businesses which were offering services on the platform. Service Seeking is an online tasking platform where customers can seek quotes for jobs, such as gardening, building or cleaning services from businesses registered with the platform.

Service Seeking admitted that it had falsely represented that reviews published on its platform were by customers, when in fact 17,000 of its 21,000 reviews had been created by the businesses themselves through the use of Service Seeking’s ‘Fast Feedback’ feature, according to the Australian Competition and Consumer Commission.

In the Service Seeking case, Justice Jackson said this type of conduct was “an abuse of trust”.

“Consumers are increasingly relying on online reviews as a way of making informed purchasing decisions. Deceiving them about the authenticity of the reviews in my view is showing contempt for consumers,” he said.

Impact on businesses

MBA Lawyers business law expert Matt Windle said online reviews needed to accurately reflect independent views of genuine customers or the business publishing them risked breaching Australian Consumer Law.

“It’s also worth noting that the content of the testimony itself must also be accurate because the fact that the customer believes a certain view would not prevent it from being misleading if that view was wrong or out of context when the business knew about such inaccuracy,” he said.

“It can also be deemed as misleading if the review is written by a third party, or if a person was paid to use the good or service and then writes an inflated review.”

Here Matt answers some other common questions in relation to consumer reviews.

Can I omit credible consumer reviews if they are negative?

While it may be tempting to omit negative reviews to gain a higher average star ranking, it is important not to do this if the review is from a genuine customer.

The only time the removal of review content is warranted is when you believe the review is fake, offensive, defamatory, or irrelevant.

We recommend businesses make a policy for the publishing and removing of consumer content.

In rare cases, where businesses are affected by personal vendettas in the form of people posting fake reviews in order to cause reputational harm, businesses have the right to complain to the platform which publishes the review and to relevant regulatory authorities.

Can I offer my customers incentives to write a review?

Sometimes business offer incentives to encourage customers to write a review. Incentives should only be offered in exchange for review if:

  • incentives are offered equally to consumers likely to be complimentary and consumers likely to be critical, and positive and negative reviews are treated the same
  • the reviewer is expressly told that the incentive is available whether the review is positive or negative
  • the incentive is prominently disclosed to users who rely on affected reviews

Can I make a complaint about a review to the ACCC?

Yes. A business can complain about a review to the ACCC.

If a complaint about a fake review from a business is held up following an investigation, under consumer law the competition watchdog can issue infringement notices.

Penalties of more than $1 million can be enforced. But that is as far as the ACCC’s powers go.

Other examples of misconduct cases

  • In November 2016 the ACCC commenced action in Court against Meriton, Australia’s largest provider of serviced apartments, for allegedly doctoring the testimonial process by devising a scheme where reviews by unhappy customers were misdirected and didn’t reach their TripAdvisor destination.  The ACCC alleges Meriton’s conduct is misleading or deceptive.
  • In 2015 the Federal Court ordered Electrodry Carpet Cleaning pay penalties after adjudicating that the company had posted, and requested that its franchisees post, customer testimonials about the quality of its carpet cleaning services when those customers were fabricated and the services had never been provided.
  • Citymove, a furniture removalist, paid penalties following action by the ACCC for fabricating customer identities in the posting of two testimonials on Google + and one testimonial on YouTube.
  • A solar panels supplier was caught by the ACCC for false video testimonials posted on YouTube.

If your business is looking for advice, please contact MBA Lawyers Partner and Queensland Law Society Accredited Business Specialist Matt Windle to discuss your matter on matt@mba-lawyers.com.au or call (07) 5539 9688.