Online Business Reputation – Some Thoughts
Online Business Reputation – Some Thoughts
by Stephen Sidkin
Exaggeration. We all exaggerate. But when does exaggeration morph into faking? And in a business context when does massaging online reviews fall foul of laws designed to protect consumers?
Certainly online reviews are a handy tool for the consumer, who benefits from having a more informed buying decision despite not being able to inspect the product on offer in advance. But in a recent report the Competition and Markets Authority has expressed concern with certain business practices that may fall foul of the law. If they do, criminal prosecution may result.
The CMA’s Concerns
The practice of businesses faking reviews for their products, whether positive for their own or negative for their competitors’ products, was a key issue for the CMA. Another concern was that in certain cases consumers may not be able to tell that endorsements made in blogs or elsewhere online were paid-for advertising.
Indeed, this is an area of business practice that is expanding. There are an increasing number of entities that specialise in writing fabricated reviews.
The Applicable Regulation
The Consumer Protection from Unfair Trading Regulations 2008 (CPRs) list a number of business practices that are prohibited in all circumstances. Amongst them are using editorial content to promote a product without making it clear that it is via paid-for advertising, and falsely representing oneself as a consumer. These two provisions catch both a business reviewing itself positively as a pretend consumer, and negatively reviewing a competitor in the same manner.
There are also some broader prohibitions in the CPRs, including misleading actions and omissions by businesses. It may be a misleading omission for a business to delete unfavourable reviews of its products, if to do so would be ‘likely to cause the average consumer to take a transactional decision he would not have taken otherwise’. Breach of the prohibitions found in the CPRs may, in serious cases, lead to prosecution.
The hard constraints of the CPRs are backed up by the Advertising Standards Authority’s “CAP Code”, which governs non-broadcast advertising, sales promotion and direct marketing. This would cover endorsement of products, and the less easily-spotted ‘advertorial’ in which an advert in a newspaper or magazine is formatted like an article or editorial. In such cases these communications must be labelled as an ‘advertisement feature’.
The general law of misrepresentation or malicious falsehood may also apply to fabricated positive and negative reviews respectively. However, such legal action is a serious step and would require affected businesses to show a certain degree of damage. Involving the CMA is a less risky course of action.
How does the new Consumer Rights Act (CRA) fit in?
The CRA comes into force on 1 October 2015, and will replace the old Sale of Goods Act 1979 (amongst other statutes). The CRA does not have any significant effect on the CPRs, because the CRA mostly governs the terms of the contract made between the consumer and business. The CPRs, on the other hand, govern the behaviour of businesses before a contract is made. Fake reviews and endorsements do not go to the terms of the contract itself, but instead they influence whether or not the consumer enters into the contract in the first place. The distinction is therefore similar to that of breach of contract and misrepresentation. Both pieces of legislation, however, have the same goal - protecting consumers.
Practical Steps
It is not against the law to pay someone to endorse your products. However, it must be made clear that such endorsements are paid-for advertising and are clearly distinguishable from user-generated comments or reviews.
Fake reviews should not be made of your products, whether or not this is done by your personnel or is outsourced to third parties. In such a case an offence will be committed by both the business and the third party.
You can and should moderate the comments that members of the public post on your website. However, the policy which governs the moderation of posts should have the aim to catch only vexatious comments or clearly fake reviews and should not justify removing genuine negative reviews.
Inducements to customers to write positive reviews should not be given, and contractual clauses forbidding negative feedback are never a good idea, either legally or commercially.
If your product is the subject of a fake review on another website, let them know – the big review platforms (such as Yelp) are aware that a considerable proportion of reviews are not genuine, and it is not in their interests to host such reviews.
If you allow reviews or comments about your products on your own website, it is desirable to operate a ‘closed’ system which only allows those who have purchased the product to review it.
And finally the CMA approved of businesses rectifying the matters that led to unfavourable comments, simply deleting them once they are rectified may not be the best course of action. Consumers may appreciate seeing a negative comment being acted upon.
by Stephen Sidkin
UIA Communication Co-director