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$1 million fine for ‘consumer’ reviews

18 October 2015 Reporter

Tempted to reward clients for favourable reviews online? You may want to reconsider. 

Fines for false customer reviews

Tempted to reward clients for favourable reviews online? You may want to reconsider. 

Medial specialist from NDA Law, Paul Gordon, says if businesses offer reviewers products or services in exchange for favourable reviews, the offer can be classified as ‘misleading or deceptive conduct’.

“If you’re posting a review of a restaurant on Instagram or writing a blog about how you used a make-up product and you fail to [disclose] you have been paid to do this – either in kind or in cash – then both the business and the influencer are breaching advertising regulations,” Mr Gordon said.

“Sometimes it’s hard to tell if an online reviewer is genuinely sharing news about a product because they like it or if it’s because they have entered a relationship that benefits them to do so, and that’s the problem.

“From the Australian Competition and Consumer Commission’s point of view, you need transparency.”

Mr Gordon said reviewers should take on the model used in the US, where reviewers who are compensated for their plugs are urged to disclose the endorsement, for example, including a hashtag such as #ad or #sponsored.

“In the US, all online posts must reveal if there is any commercial affiliation, but in Australia we don’t see many acknowledgements online,” he said.

“[That] will have to change in the future as consumers demand a right to know what is truthful and authentic and what isn’t.”

Under Australian law, if an SME decides to pay a reviewer for a review of their product or service, and that payment is discovered, the SME can be penalised up to $1 million for “engaging in deceptive and misleading conduct and breaching advertising standards”.

“It could be an expensive surprise for businesses looking for a quick, cost-effective lift to sales,” Mr Gordon said.

“There’s also been problems where bloggers or Instagrammers have tried to extort rewards from businesses like cafes or restaurants with the threat of a bad review if free services aren’t provided.”

$1 million fine for ‘consumer’ reviews
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