In February 2015 the Competition and Markets Authority (CMA) launched a call for information into online reviews and endorsements in order to look into the way they are used by business. This was after concerns were raised that the lack of impartiality of such reviews and endorsements on online review websites could ultimately mislead consumers.
Following this the CMA then launched a number of investigations into whether companies had breached consumer protection laws, such as the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) and the CAP Code for advertising, by failing to disclose that they have paid others to endorse their company online.
In March of this year the CMA took enforcement action against a search engine optimisation and online marketing company, Total SEO & Marketing Ltd, for publishing bogus online reviews for its clients. Between 2014 and 2015 Total SEO had published over 800 bogus positive reviews across 26 different websites which contain customer reviews.
The CPRs contain a general prohibition on unfair commercial practices. A commercial practice is unfair if it contravenes the requirements of professional diligence and material distorts or is likely to materially distort the economic behaviour of the average consumer with regard to a product.
The CPRs also prohibit misleading and aggressive practices and contain a list of 31 banned practices which are prohibited in all circumstances. Importantly, the list includes falsely claiming or creating the impression that the trader is not acting for purposes relating to his trade, business, craft or profession, or falsely representing oneself as a consumer.
Following the investigation, the CMA ordered Total SEO to remove any fake reviews from publication and obtained undertakings from the company not to repeat the practice of writing fake reviews for its clients or to falsely represent itself as a consumer.
Nisha Arora, CMA Senior Director, noted that “Search engine optimisation companies, PR and marketing agencies provide a valuable service to businesses, but they must do this lawfully. Our enforcement action against Total SEO makes clear that posting fake reviews about clients is unacceptable. This is our latest action to ensure that consumers can trust in the opinions that they read on online, following the CMA’s report last summer into online reviews and endorsements.”
This and other recent enforcement action by the CMA serves as a reminder that businesses that mislead consumers through the use of bogus online reviews and endorsements may be in breach of the Consumer Protection from Unfair Trading Regulations 2008. The enforcement action against Total SEO, a businesses involved in the supply of such reviews, is the first of its kind by the competition regulator.
When the CMA published a report on their findings into online review practices in June 2015, they estimated that “£23 billion a year of UK consumer spending is potentially influenced by online reviews”. They recognised the potential positive online reviews have in helping new business enter the market and increase competition and that they are committed to supervising practices in this sector.
The CMA is expected to announce the outcome of their associated investigation into unlabelled endorsements before the end of April.