Earlier today, the Commissioner of Competition (the “Commissioner”) announced that it had entered into a Consent Agreement with Bell Canada (“Bell”) in connection with certain Bell employees posting misleading reviews and ratings of the company’s mobile applications. Under the terms of the Consent Agreement, Bell must not “direct, encourage or incentivze” its employees or contractors to “rate, rank or review apps in app stores.” Additionally, the Consent Agreement requires Bell to enhance and maintain its compliance program and pay a $1.25 million administrative monetary penalty.
This is the first case brought by the Commissioner relating to the use of social media ranking activities of a company and the Consent Agreement clearly states that the Commissioner’s view is that ratings and reviews “have become an important source of information for consumers”. This enforcement approach is consistent with the Competition Bureau’s (the “Bureau”) stated position that the application of competition laws to the digital economy is one of the Commissioner’s enforcement priorities.
In November 2014, the media reported that, following several complaints, the Bureau was looking into whether Bell had engaged in conduct that is commonly referred as “astroturfing” (i.e., where employees or consultants of a company generate positive reviews in support of the same company’s product or service). On December 18, 2014, the Commissioner launched an inquiry into the marketing practices engaged by Bell employees.
Astroturfing is viewed as a form of misleading advertising under Canadian competition law, as it creates the false impression that independent consumers have had positive experiences with that product or service. This behaviour is increasingly viewed as problematic given the weight consumers typically give to independent product reviews and ratings, and the growing popularity of review websites and apps.
According to the Bureau’s press release, certain Bell employees were encouraged to post positive reviews and ratings of the free MyBell Mobile app and Virgin My Account app on the iTunes App Store and the Google Play Store. These apps allow Bell customers to manage their existing mobility accounts directly from their mobile devices. The employees did not disclose the fact that they were employed by Bell.
The Bureau concluded that these reviews and ratings created the “materially false or misleading” general impression that they were made by independent and impartial consumers and temporarily affected the overall star rating for the apps.
As soon as Bell became aware of the conduct, it removed the employees’ reviews and ratings, updated its social media guidelines, and cooperated fully with the Bureau’s investigation. The Consent Agreement reflects this and indicates that Bell’s full cooperation resulted in more favourable terms than would otherwise have been the case.
While the digital economy provides businesses with the opportunity to effectively target customers, businesses must be careful how they design and implement their advertising campaigns. This is particularly so with respect to social media/digital advertising strategies, which are coming under increasing scrutiny by a number of Canadian regulators.
This case is noteworthy because it underscores the importance of disclosing material affiliations between a company and a reviewer (e.g., employment, sponsorship, paid reviews, etc.) when posting positive reviews or ratings regarding a product or service the business is offering.
As stated above, this case also highlights the fact that the digital economy continues to be a priority enforcement area for the Commissioner and the Bureau. This case reinforces the need for businesses to implement appropriate compliance measures to ensure that their digital/mobile marketing campaigns comply with applicable Canadian laws (i.e., Competition Act, CASL, privacy laws, consumer protection, etc.) – especially in light of the significant penalties and reputational harm that may flow from non-compliance. The other takeaway is that, given the rapidly evolving nature of the digital/mobile space, it is necessary for companies to continually assess the effectiveness of their existing compliance measures and update them, as appropriate.