Following the publication of the Competition and Markets Authority's (CMA) report into online reviews and endorsements, businesses are reminded of the dangers of using certain practices that would be likely to be considered a breach of consumer protection regulations.
Reporting on the CMA's investigation, the BBC highlighted a recent statistic from the Harvard Business School which suggests that a restaurant can expect increased revenue of between 5-9% as a result of an increase of one star in its online rating profile achieved via consumer feedback. Whilst the power of consumer reviews and endorsements has long been known, this statistic reveals just how significant a positive online reputation can be in ensuring the profitability of a business and/or its products and services. However, many businesses are unaware of the significant implications of manipulating such information.
As the digital landscape continues to redefine the way in which consumers make choices, the importance of an untainted digital footprint is not lost on businesses with many already proactively taking steps to ensure their online presence appears unblemished. The recent upsurge in online reputation management companies is also testament to the scale of an industry that continues to grow with the CMA report estimating that online reviews influence £23 billion of consumer spending a year in the UK alone. However, businesses need to be aware of the risks involved in influencing the way in which online reviews about both them and their competitors are presented to consumers.
The CMA's report sought to look more closely at the industry specifically in relation to whether or not it is being abused amid growing concerns of misleading and unfair practices. In particular the CMA highlighted the following areas of concern that would be likely to represent a breach of UK Advertising and Consumer Protection regulations:
- Businesses writing or commissioning fake reviews about themselves.
- Businesses or individuals writing or commissioning fake or negative reviews.
- Review sites cherry-picking positive reviews or suppressing negative reviews without making that fact clear to consumers.
- Moderation processes causing genuine reviews not to be published.
- Sponsored endorsements not making clear they have been sponsored.
The CMA has been clear in setting out its expectations for industry. Going forward businesses should:
- Not incentivise consumers in return for positive reviews
- Not author fake or disparaging reviews
- Ensure they are up front about their commercial relationship with reviews/endorsers where applicable.
Those businesses failing to meet the above obligations are at significant risk of being found in breach of the regulations with the CMA making clear that they will take enforcement action to ensure businesses compete fairly and comply with the law.