Online reviews: don't get tripped up by the Australian Consumer Law

The prohibition on misleading or deceptive conduct in section 18 of the Australian Consumer Law (ACL) may apply to online reviews in ways which you didn't imagine, following the decision in ACCC v Meriton Apartments Pty Ltd [2017] FCA 1305. Any business that is the subject of online reviews should be aware of this decision, particularly if it encourages its customers to submit online reviews.

Parts of the Australian Consumer Law that may apply to online reviews

Section 18 of the ACL is the prohibition on misleading or deceptive, which readers are no doubt familiar with. Section 34 may be less familiar. It prohibits a person from engaging “in conduct that is liable to mislead the public” as to the nature, suitability or quantity of any services. Sections 18 and 34 are not the only provisions of the ACL which may apply to online reviews. It's also worth noting sections 29(1)(e) and (f) which address false or misleading representations concerning testimonials.

Meriton gets tripped up by the ACCC

You will no doubt be aware of TripAdvisor, but may not be aware of its service for accommodation providers called “Review Express”.

Review Express worked as follows. Accommodation providers sent the email addresses of recent guests to TripAdvisor. TripAdvisor then sent the guests an email inviting them to post a review on the TripAdvisor website. A guest could still post a review if they did not receive an email from TripAdvisor but they would have to take the initiative to do so themselves.

Meriton engaged in two practices which attracted the ACCC's attention:

• First, the email addresses of guests who complained to Meriton during their stay were sent by Meriton to TripAdvisor with “MSA” inserted into the address. As a result the email address was incorrect and the complaining guest did not receive an email from TripAdvisor asking them to post a review.
• Second, Meriton withheld email addresses in bulk from TripAdvisor for all guests who stayed at a property when there had been a major fault, such as elevator or hot water failure.

Justice Moshinsky summarised Meriton’s conduct as “soliciting reviews from many guests who had stayed at its properties, but not from those considered likely to write negative reviews.” Meriton’s very own expert witness described Meriton’s conduct as “gaming” the TripAdvisor website.

Meriton admitted that it engaged in both practices and that “it ought not to have done so” but disputed that its conduct amounted to a breach of the ACL.

Justice Moshinsky disagreed and found that Meriton had contravened sections 18 and 34. The following factors were important to his finding:

• Meriton’s conduct reduced the proportion of negative reviews of Meriton’s properties on the TripAdvisor website.
• Meriton’s conduct altered the ranking of Meriton’s properties on the TripAdvisor website but not their ratings. The large number of reviews of Meriton’s properties meant that the elimination of a small number of negative reviews due to Meriton’s conduct was unlikely to change their ratings. However, the rankings of properties were separated by little so the elimination of a small number of negative reviews was still likely to change their rankings.
• Consumers would have assumed that reviews were not solicited by Meriton in a “selective way”.

So how should you manage online reviews to comply with the ACL?

In November 2013, the ACCC published guidance concerning online reviews called Online reviews—a guide for business and review platforms. The guide is essential reading for any business which deals with customers that post online reviews and any business that operates an online review platform.

The guide contains three “guiding principles”. First, a business should be “open and transparent to consumers” about any commercial relationships between the review platform, the reviewed businesses or reviewers.

Second, a business must not post misleading reviews. Reviews may be misleading if they were written by the business, a competitor of the business or someone who was provided with a benefit by the business to write an inflated review.

Third, a business should be careful when omitting or editing reviews posted by customers. More particularly, the ACCC’s guidance says:

"The overall impression created by a body of reviews on a review platform may be misleading if it does not reflect the opinions of the reviewers who have submitted the reviews. The selective removal or editing of reviews, particularly negative reviews, by review platforms for commercial or promotional reasons may be misleading."

The recent case of ACCC v Aveling Homes Pty Ltd [2017] FCA 1470 dealt with conduct that appears to have not complied with the first and third "guiding principles". The ACCC alleged that Aveling established two websites which it represented to consumers were independent of Aveling and affiliated with the independent review website, www.productreview.com.au (they weren't), and did not publish several unfavourable reviews on them. Unlike ACCC v Meriton Apartments Pty Ltd, this case was resolved by Aveling admitting the contraventions and agreeing to various orders including penalties of $380,000 and a corrective advertisement.

But did Meriton contravene any of the three "guiding principles" in the ACCC's guidance? It appears not. Meriton did not remove or edit any reviews on TripAdvisor nor did it offer benefits to customers to encourage them to write an inflated review. Instead, Meriton altered the information it provided to TripAdvisor so that certain guests would not receive an email prompting them to write a review. For this reason, ACCC v Meriton Apartments is a notable development concerning misleading or deceptive conduct and online reviews. Of course, it is the ACL which a business must comply with and not guidance provided by the ACCC, but such guidance is an indication of what the ACCC considers compliant behaviour.

In light of ACCC v Meriton Apartments, any business should be wary of selectively asking customers, who they believe to have had a positive experience, to write an online review even if the business does not provide the customer with an incentive to write the review (such as a discount on their next purchase). Meriton essentially did the converse by eliminating an email prompt which would have “asked” dissatisfied customers to post a review. This was found to be a contravention of the ACL and is likely to have significant legal consequences for Meriton. Just how significant will be revealed later this year when Justice Moshinsky makes orders about penalties.