With many consumers and businesses using digital technology, the activities of these businesses are now more public than ever before. This is leading to a growing number of businesses being held accountable by online review websites. For some, this presents the possibility of free publicity and advertising. For others, however, poor reviews may spell the end of their entrepreneurial venture. Dealing with such negative reviews and even fake reviews is a serious cause for concern for business owners, managers and investors.

What is an online review website and how do they work?

Online review platforms or websites, such as TripAdvisor or ProductReview, receive submissions with ratings from reviewers (customers) who have received a product or service from a business. These reviews are usually summarised by an overall rating for the business of between 1 and 5 stars. The reviews can then be viewed on the website by other members of the public. Ratings are usually automatically posted unless they are believed to be fake, and the business under review often has no right to ask for the review to be removed. Online review websites are rarely associated with the business or service being reviewed, so they often do not have an interest in maintaining a positive rating for such businesses or services.

What if an online review website misrepresents the performance of a business?

Generally, legal consequences for a review website are unlikely unless it misrepresents a business’ performance through its review system or it publishes defamatory content. By the same token, if an online review website discards positive reviews, or otherwise prejudices a business by misleading consumers, there may be legal ramifications.

The recent decision in the ACT Civil and Administrative Tribunal of Lollypotz v Productreview.com.au demonstrates that businesses should be cautious in bringing a claim against online review websites. In this decision, one of Lollypotz’s claims was that ProductReview attempted to injure their on-line business by removing 5-star and 4-star reviews. This claim is most accurately described as falling within the tort (a civil wrong) of injurious falsehood, where a business suffers financial damage because of false statements. Among other things, this requires:

  1. a published false statement in relation to someone’s goods or business; and
  2. proof of actual damage suffered because of that statement.

This tort is now largely covered by the Australian Consumer Law which states that a person must not, in trade or commerce, engage in conduct that is likely to mislead or deceive.

Although the applicant was ultimately unsuccessful in Lollypotz v Productreview.com.au, evidence was submitted that suggested that other businesses are also concerned with the conduct of online review websites. At the end of his reasons, the Tribunal Member provided a timely reminder that it is not always wise for people to go to court without legal representation, as Lollypotz had. It is especially important to seek legal advice where there are complex legal issues involved such as those outlined above.

How can we help?

The business team at Snedden Hall & Gallop has extensive experience in all areas of consumer law and can help if you are concerned about your legal rights.

Contact the team here at Snedden Hall & Gallop on 02 6285 8000 or by email.