Regulatory & Compliance

The disclosure of paid advertising is a contentious issue in light of the increasing social media and online review platforms. This raises ancillary issues of the obligation of review platforms to monitor and remove fake or misleading reviews. In its advertising and selling guide, the ACCC has stated that ‘[r]egardless of the advertising medium, any review or testimonial should reflect the genuine views and opinions of the person that is represented to have made it. Businesses must not misrepresent consumer opinions to dishonestly promote themselves. A fake review or testimonial is one which does not reflect the genuinely held opinion of the author. Using false or misleading reviews or testimonials in any advertising medium will risk contravening the ACL.’

The ACCC has produced guiding principles on the issue stating at principle 1 that companies must be transparent about commercial relationships as undisclosed commercial relationships may lead to an unfair competitive advantage between competing reviewed businesses. At principle 2 it is stated that companies must not publish or post misleading reviews, as these may mislead consumers who may think the review is impartial.

In light of this, disclosure is required. Non-disclosure will risk breach of the Competition and Consumer Act 2010 (Cth) (‘CCA’). The ACCC suggests disclosure can be made through a prominent explanation of the nature and extent of the commercial relationship and its impact on the review of the business. Furthermore, the ACCC suggests that reviews that are promoted or improved because of a commercial relationship are distinguished from other non-paid review results.

In 2016, the ACCC announced the development of new guidelines by the International Consumer Protection and Enforcement Network (‘ICPEN’), an informal collaboration between the ACCC and other consumer law regulators in other jurisdictions. The new guidelines state that the relationship should be disclosed in a manner that is clear and prominent to consumers, for example, on the page of the relevant business.

The publication of fake or misleading reviews by a company is subject to penalties, and should be avoided. In 2011 the ACCC ordered an infringement notice of $6,600 after a removalist created a review website using fake testimonials which appeared to be genuine consumer testimonials about its own services, and fake negative testimonials about the services of its competitors. Fake reviews were also made on third party review websites. In 2016, the ACCC instituted proceedings in the Federal Court alleging that Meriton took steps to prevent guests it suspected would give a negative review from potentially posting a negative review.

Companies may face further compliance issues where they provide incentives to consumers to review items. Such incentives can be financial or other material benefits. In such matters, the ACCC has stated that the review administrator should not limit incentives only to favourable or positive reviews. Furthermore, there should be prominent disclosures on the webpage or social media pages where an incentive was provided to the reviewer.

The ACCC has found that the omission of negative reviews can be just as misleading as posting fake reviews. Thus, businesses should not selectively remove negative reviews, or edit them to make them more favourable. The only circumstances in which reviews can be removed is where they are fake, offensive, defamatory or irrelevant. Removing this type of content is not considered misleading as consumer review platform users anticipate some removal to improve the quality of reviews.Consumers are under an impression that reviews are genuine. Failure to remove reviews that are considered to be fake may also breach the CCA.

The disclosure of paid advertising, and the posting of fake or misleading reviews are important issues considering increased use of social media and online review platforms. Businesses should be aware of their obligations when posting and monitoring reviews to ensure compliance with the CCA.

To find out more about Regulation & Compliance check out our Resources Centre. If you need any further advice about Advertising Regulations or misleading reviews, please get in touch today.

This article was authorised by Warwick Heeson.

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