ACCC rules on hotel reviews, so?

AccomNews Sunday, December 8, 2013

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The Australian Competition and Consumer Commission is addressing misleading conduct related to fake online reviews, by releasing best practice guidance about online product reviews for businesses and review platforms. The real question is will it have any affect on unscrupulous reviews? We eagerly await the first action against TripAdvisor.

“Online reviews are an increasingly popular resource for consumers purchasing goods or services. Many businesses rely on these reviews to promote their businesses, however, some unscrupulous businesses are taking advantage of consumer trust in online reviews,” ACCC deputy chair Michael Schaper said.

Online reviews help consumers make informed decisions based on a range of third party consumer opinions. More consumers are relying on these reviews and a recent Sensis Social Media Report 2013 suggests that 74% of social media users read online reviews before making a purchase.

The publication, Online reviews: a guide for business and review platforms follows extensive consultation with a wide range of consumer and industry representatives.

“Australian consumers have more choice than ever before. However, with more options available, it is important that there is accurate and reliable information available to help consumers choose,” Dr Schaper said.

The ACCC is concerned that there is an increase in paid for and fake reviews. Many consumers believe that reviews on various review platforms are the genuine experience or views of other consumers.

“Fake online reviews mislead consumers and hurt Australian businesses. Businesses that pay for or post fake reviews can gain an unfair advantage or damage their rivals,” Dr Schaper said.

The guidelines set out three core principles of conduct for businesses to abide by:

• be transparent about commercial relationships,

• don’t post or publish misleading reviews, and

• remember that omitting negative reviews can be as misleading as posting fake reviews.

Penalties of up to $1.1 million are available to the courts for misleading or deceptive conduct which breaches the Competition and Consumer Act 2010. The ACCC has previously taken enforcement action against businesses in relation to misleading reviews and testimonials and will continue to monitor the online reviews sector for contraventions of the act.

The guidelines are intended to provide practical suggestions to platforms and reviewed businesses to help them reduce the risk of misleading consumers.

“Fake online reviews are in breach of the Australian consumer law and businesses are advised not to write or commission reviews about their own business or a competitor’s business which are misleading,” Dr Schaper said.

As well as fake reviews, the ACCC is concerned about two other categories of misleading behaviour connected with online reviews. These are:

• the manipulation of review results by review platforms as part of a commercial relationship between the platform and the reviewed business; and

• businesses artificially inflating their review results by offering consumers generous incentives in exchange for reviews of their products or services.

Consumers rely on online reviews to make purchasing decisions. Businesses and review platforms need to manage online reviews to prevent consumers from being misled. Businesses and review platforms that do not remove reviews that they know to be fake risk breaching the Competition and Consumer Act 2010.

Reviews may mislead consumers if they are presented as impartial, but were written by:

• reviewed business

• a competitor

• someone paid to write the review who has not used the product

• someone who has used the product but written an inflated review to receive a financial or non-financial benefit.

Tips for businesses

The ACCC considers conduct such as the following to be misleading. You should not:

• encourage family and friends to write reviews about your business without disclosing their personal connection with your business in that review

• write reviews when you have not experienced the good or service reviewed or which do not reflect a genuinely held opinion

• solicit others to write reviews about your business or a competitor’s business if they have not experienced the good or service.

Businesses that offer incentives to those who write positive reviews risk misleading consumers and breaching the CCA. Incentives should only be offered in exchange for reviews of your business (its products or services) 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.

Commercial relationships between review platforms and businesses may influence the overall rating of a business on the site. For example, a review platform may allow businesses that advertise on the site to select a review to appear at the top of the page or prevent negative reviews from being automatically uploaded. This may mislead consumers by creating an impression that the business received more favourable reviews than it actually has. Disclosing commercial relationships between review platforms and businesses helps consumers make better informed decisions about the business and its products or services.

Star ratings – The number of reviews which form the basis of an aggregated (e.g. star) rating may be relevant to the weight which a site user gives to that aggregated rating. If an aggregated rating system is provided, it is recommended that consumer review platforms disclose the total number of reviews that the rating is based on next to the aggregated rating (eg.3 stars, 24 reviews).

Businesses and review platforms that selectively remove or edit reviews, particularly negative reviews, for commercial or promotional reasons may be misleading consumers. If the total body of reviews doesn’t reflect the opinions of consumers who have submitted the reviews consumers may be misled.

Businesses and review platforms may be able to identify fake reviews by those that are:

• part of a significant spike in reviews about a particular business over a limited period of time

• written from the same email or IP address as each other or as the business reviewed

• written about the same business, product or service where the reviewers’ accounts are very similar for example, similar email addresses, user names, passwords or IP addresses

• written in overly positive or “marketing speak” writing styles

• written in the same language as other reviews of the same business or product.

The chief executive officer of the Accommodation Association of Australia, Richard Munro, said he was pleased that the ACCC has chosen to address the issue, that will affect both businesses and review platforms.

“The AAA is pleased that the ACCC has seen fit to go down this path,” Mr Munro said. “The association has led calls for changes to the oversight of online reviews for some time and this is a tangible outcome”.

“There are no winners with fake online reviews – they are bad for consumers and even worse for the accommodation businesses who are the subject for them.

“The association’s view is that a balance of consumer feedback and physical inspection of properties is the ideal outcome and taking steps to ensure the accuracy of online comments and reviews is even more important than ever.”