Luxury retailer, Cosette, is currently facing allegations that it silenced consumers who purchased possible 'superfake' handbags from their store.
Some consumers have accused Cosette of pressuring them to remove negative reviews in exchange for a refund and paying a third party to remove negative reviews and plant positive reviews. These allegations, which came to light though reporting in the SMH and The Age newspaper, follow the trend of consumers increasingly relying on online reviews to inform their purchasing decisions, with some sources estimating that as many as 90% of consumers check reviews before making a purchase.
Given recent action taken by the ACCC to prioritise enforcement action against manipulative reviews, these allegations underscore the importance for businesses to ensure their marketing practices are not misleading consumers by distorting online customer reviews.
Fake reviews and the Australian Consumer Law (ACL)
The ACL explicitly prohibits misleading or deceptive conduct, as well as more general provisions that prohibit businesses from acting in a way that can mislead consumers regarding the quality of goods and services. Effectively, these provisions extend to prohibit businesses from both submitting fake or misleading reviews and incentivising customers to remove their negative reviews.
The generalised provisions play a more critical role for the ACCC in pursuing businesses that may be engaging in more sophisticated review manipulation practices beyond just submitting fake reviews. Importantly, however, it is the specific prohibitions, including (for example) from making false representations as to the testimonial of any person or the quality of goods or services that attract civil penalties.
In December 2013, the ACCC released its guidance for online product reviews and expressed concerns about an increase in paid-for and fake reviews. Since the publication of that guidance, there have been several investigations and court decisions concerning businesses posting fake reviews, including the following:
From 2015, the ACCC began to target businesses that may not have themselves been posting fake reviews but instead engaged in conduct that manipulated the review process. These investigations include the following:
Recent ACCC action
Between July 2020 and 2022, the ACCC took no significant public action to investigate or prosecute fake or misleading reviews. However, in its annual enforcement priorities announcement last year, the ACCC identified this conduct as a priority and committed to tackling deceptive advertising that distorted consumer choice, particularly the manipulation of online reviews.
In October 2022, the ACCC announced that it would review at least 100 businesses as part of an internet sweep targeting fake or misleading online reviews and testimonials. In January 2023, the ACCC announced that it would be starting a sweep to identify misleading testimonials and endorsements by social media influencers, following the receipt of tip-offs from the public. The ACCC has not yet published the findings of these two sweeps.
The negative media attention to which Cosette was subjected shows that the public is increasingly concerned about how vulnerable they are to manipulated online reviews. At the same time, the ACCC has made this conduct an enforcement priority and is sweeping the internet for businesses that it can make an example of.
The ACCC’s renewed focus and historic investigations make it clear that it is not enough that businesses avoid writing fake reviews. Instead, businesses should holistically monitor their practices to ensure that they are not encouraging customers to post positive reviews and disincentivising customers from writing negative ones. If your business publishes customer reviews, ratings and testimonials, they must be genuine, unaltered and free of any improper influence.