Businesses that publish testimonials to promote their products or services, should ensure that their testimonials are not false or misleading. This is demonstrated by the recent case of ACCC v P & N Pty Ltd (ACCC v P&N Pty Ltd),1 which provides some guidance on publishing testimonials.
ACCC v P&N Pty Ltd
In ACCC v P&N Pty Ltd, the three respondents were related companies who carried on a business as a supplier of solar panels. Mr Patel was the sole director and shareholder of P&N Pty Ltd as well as the sole director of another respondent in the proceedings.
Between May 2012 and February 2013, the respondents published videos and written statements that purported to be testimonials by their customers relating to solar panels. The Court, based on a statement of agreed facts and joint submissions by the parties, found that the testimonial representations made by the respondents were false, misleading or deceptive because the purported testimonials were not given by genuine customers of the respondents. Accordingly, the Court held that the respondents contravened section 29(1)(e) of the Australian Consumer Law (ACL) as well as section 18 of the ACL, which relates to misleading or deceptive conduct.
The respondents were also found to have contravened sections 18 and 29(1)(k) of the ACL by virtue of representing to consumers that the solar panels were made in Australia when, in fact, they were made in China. Section 29(1)(k) prohibits a person, in connection with the supply of goods or services, from making a false or misleading representation concerning the place of origin of goods.
Given the above, the Court ordered the respondents to pay combined penalties of $125,000 and Mr Patel to pay a penalty of $20,000.
As a response to its concerns regarding the increase in paid for and fake reviews and testimonials, the Australian Competition and Consumer Commission (ACCC) has published guidelines for businesses that use online review platforms (i.e., sites which specialise in presenting product reviews about a range of businesses). Addisons has previously written about these guidelines and the steps that businesses can take in order ensure that their online review platform does not contravene the ACL.2
Take Home Points
Many businesses, including direct selling companies, publish testimonials to promote their products or services. When publishing testimonials, businesses should give consideration to the following guidelines:
- Ensure that the testimonial is reasonably accurate and genuinely reflects the customer's opinion on or experience of the product;
- Ensure that the testimonial is not false or likely to mislead or deceive consumers;
- Ensure that the testimonials are from genuine consumers and that any claims made in respect of goods or services are able to be substantiated;
- If using "before" and "after" photos, ensure that the photos are of the same person and that photos are taken at the same time of day, using the same backdrop and lighting; and
- Do not use a testimonial which is fictitious.
It is timely for businesses to be proactive in reviewing the ways in which their products and/or services are promoted.