On Tuesday, the ACCC released a best practice guide about online reviews for businesses and review platforms.  In February 2013, ACCC Chairman Rod Sims identified online reviews and false testimonials as one of the ACCC’s compliance and enforcement priorities for 2013, so it is helpful for businesses to have clearer guidance in this space.  The Guidelines provide detailed practical examples, making clear the types of conduct the ACCC views as potentially misleading.  It should be considered by any companies which host online reviews on their own sites, or rely on customer testimonials or reviews, whether on their own sites, on third party review sites or on social media.

The Guidelines set out three core principles of conduct for businesses to abide by, namely:

  • be transparent about commercial relationships;
  • don’t post or publish misleading reviews;
  • and remember that omitting negative reviews can be as misleading as posting fake reviews.

While it has always been possible for companies to use and circulate false testimonials and reviews, the growth of online platforms and social media makes circulation much easier.  Consumers have also become heavily reliant on online reviews.  According to the 2013 Sensis ‘Yellow’ Social Media Report, 74% of social media users read online reviews before making a purchase.  A BrightLocal Survey this year also found that 79% of consumers trust online reviews as much as personal recommendations, and that 67% of consumers read 6 reviews or less before making a judgment call about a business.

The ACCC has previously taken action in relation to misleading testimonials, including:

  • in 2011, Citymove paid a $6,6000 infringement notice issued by the ACCC for misleading reviews on its website which purported to be from genuine customers when they were not; and
  • in May 2013, the ACCC commenced proceedings against the operators of Euro Solar and Australian Solar Pane for conduct that includes the use of false testimonials on their websites to promote the quality of their solar panel products.  The ACCC alleges that these reviews were not made by genuine customers.

And it’s not just small businesses.  Reports suggest that Samsung was investigated by Taiwan’s Fair Trade Commission in April this year for allegedly hiring students to write online articles attacking HTC and recommending its own handsets.

The United States’ equivalent to the ACCC, the Federal Trade Commission (FTC), has similar guidelines concerning the use of endorsements and testimonials in advertising.  These were last updated in 2009, and the examples included are more targeted at the offline sphere, but the messages are the same: don’t mislead, disclose connections, and be transparent. If you are trying to determine whether a disclosure you need to make online is “prominent” enough, the FTC’s 2013 .com Disclosures guide provides useful practical examples and mock-ups.

The ACCC Guidelines include some stringent best practice suggestions which could be quite onerous, particularly for online review sites, including that they should:

prominently disclose the nature and extent of any commercial relationship it may have with businesses; distinguish promoted or improved review results from ‘organic’ review results; have appropriate processes and procedures in place to detect and remove fake reviews; prominently disclose the total number of reviews that an aggregate rating is based on; and seek to identify and respond appropriately (by removal or disclosure) where a business is incentivising customer reviews to inflate their review results.

The Guidelines also include best practice suggestions for businesses which use or rely on online reviews.  A copy of the Guidelines are available online here.