03 July 2015
Fake Online Reviews Under Investigation by the CMA
The Competition and Markets Authority (CMA) has discovered that thousands of online reviews are actually fake, and many companies are paying people to write positive reviews.
The CMA also found out that many companies were posting disparaging remarks about their competitors to cloud customers’ judgments. Not only that, but companies were also paying for review sites to hide negative or unflattering reviews.
More than half of UK adults use online review websites such as TripAdvisor and Amazon to help them choose which products and services to buy. That’s around 25 million people using the internet to influence their purchases.
How Bad is the Problem of Fake Reviews?
The real level of the problem is difficult to uncover as it is often hard to spot a fake review. The CMA has expressed concern that the problem could be widespread. Some websites have replied to questioning stating that just 2% of reviews are false, but other sources have claimed that the proportion is much higher.
An investigation is now underway in connection with the non-disclosure of paid endorsements, and any firms that have been found to be acting illegally will be fined with bosses potentially facing prison sentences.
False, negative reviews can hugely damage a firm’s reputation and can have a massive impact on business. While consumers should not be constrained to prevent genuine reviews which may be negative, the ability for anonymous reviews to be posted means that businesses are often unable to engage with reviewers or argue that a review is false or misleading.
In a survey of 804 hospitality operators undertaken by the British Hospitality Association (BHA), more than half (55%) said that a single review had caused their business harm, while around 75% found user reviews to be useful in promoting their business.
Other practices that have been called into question include paying customers for positive reviews, or offering them money off and other incentives. For example, a travel company offered customers £25 off a future holiday if they posted positive reviews on TripAdvisor and Review Centre; The practice was stopped as soon as it became public knowledge.
Celebrity endorsements are also being investigated with seemingly innocent off the cuff remarks on social media turning out to actually be paid for by the company behind the product. In 2012, Wayne Rooney was censured for trying to pass off an advertisement for Nike as a personal comment. In this case the Advertising Standards Agency became involved as all advertising is meant to be identifiable as a paid for promotion of a product.
Online review sites will now be under scrutiny and customers may become more cynical and critical of opinions posted on them. The CMA’s investigation is likely to take some time but they will be rigorous and pursue any lines of enquiry that may lead to a prosecution.
If your organisation uses online review sites and you need legal advice about fake or malicious reviews you will need the help of a specialist business lawyer. Our team at Slater and Gordon have many years’ experience dealing with all aspects of business law and are available on freephone 0800 916 9052 or contact us online and we will call you.
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