Lesson for Businesses: Meriton Fined $3 Million for Misleading and Deceptive Online Reviews
In the age of digital marketing, people are turning more and more to online reviews to shape their decisions about which products or services to spend their money on. An article by Forbes Magazine in 2017 found that 90% of consumers read online reviews before visiting a business and more than 70% of customers said that a positive review makes them trust a business more.
However, even the best businesses have their disgruntled customers. So, if you get a negative review of your service or product, can you just sweep it under the rug?
Last week, the Federal Court ordered hotel giant, Meriton, to pay $3 million after it was found to have engaged in misleading and deceptive conduct.
Meriton was found to have misled and deceived consumers by preventing disgruntled or possibly unhappy guests from leaving bad reviews on TripAdvisor. This was done by altering guest’s email addresses provided to TripAdvisor. Meriton employees were encouraged to add the letters “MSA” to the start of unhappy customer’s email addresses, thus making them invalid. The guest would subsequently not be invited to review the hotel on the website through TripAdvisor’s “Review Express” program.
In handing down his judgement, Justice Moshinsky stated that this practice “… created an unduly favourable impression of the guest feedback about the serviced apartments, because the reviews had been solicited on a selective basis.”
The Australian Competition and Consumer Commission (ACCC) welcomed the decision, noting that people are often highly influenced by sites such as TripAdvisor when making decisions for accommodation.
What is misleading or deceptive conduct?
Under section 18 of the Australian Consumer Law, a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
Conduct is generally found to be misleading if it induces an error, or if there is a real (and non-remote possibility) that a person is likely to be misled or deceived.
It’s important to note that the words “likely to mislead or deceive” means that the offending conduct doesn’t have to have actually mislead or deceived anyone, it is sufficient if it can be proven that the conduct is inherently misleading and/or deceptive.
Lesson for small business owners
- There’s no substitute for quality
Flooding your online profiles with fake reviews from family and friends might seem like a good idea for boosting your credibility. However, reviews that aren’t genuine tend to be phoney, overly positive and are often easy to spot. If “Browns Bakery” has 1000 glowing reviews, that’s awesome! However, if most of them are from Mrs Brown (proud mother) raving about her son’s baking skills and general charm, people are probably going to keep searching. Further to this, fake reviews put businesses at risk of engaging in misleading and deceptive conduct, which could have negative legal implications in the future.
The old saying is true, it takes years to build a reputation, and seconds to destroy it. Businesses that are willing to go the extra mile for their customers build up good online reviews – but it doesn’t happen overnight. It takes years of hard work. However, the second a business gets found out for fudging reviews, or using underhanded marketing tactics, it loses all credibility and customers often choose to spend their money elsewhere.
- Use the term “free” with great caution
The idea of getting goods or services free of charge is highly attractive to potential customers and can be a great way of getting people through the doors of your business. However, many customers will naturally assume “free” means completely free of charge or obligation.
Businesses can get into trouble if they aren’t crystal clear about what is and isn’t free. For example, if a meal is advertised as “buy one get one free”, however, the cost of the first meal is twice as much to cover the cost of the second “free” one, then this will likely be found to be misleading and deceptive conduct on behalf of the business.
- Get familiar with what is and isn’t “puffery”
Puffery is where a business makes obvious exaggerated claims about goods or services that a consumer would be unlikely to be mislead by. For example, “the best ice-cream in the Southern Hemisphere” is pretty obvious puffery. However, “award winning ice-cream” could be considered misleading advertising if there isn’t any evidence of the alleged awards.
Want to know more about Australian Consumer Law? Please don’t hesitate to contact our experienced Newcastle commercial lawyers at Butlers Business Lawyers on (02) 4929 7002, or fill out an enquiry form on our website.
