The Good, the Bad and the Libellous – An overview of legal issues concerning online product and service reviews

Online review platforms – websites that provide information about products, services and businesses based on consumer-experiences – are on the rise. So too is the reputational risk which may result from the publication of negative reviews. The Australian Competition and Consumer Commission (ACCC) has already weighed into the debate and published its own guidelines for reviewers and review platforms. There have also been a number of legal threats, as well as court proceedings commenced, by disaffected businesses which have been on the receiving end of poor reviews.

One manifestation of this behaviour – the phenomenon of lawyers threatening to sue their own clients for negatively reviewing them online – has recently been highlighted in the United Kingdom. Some have described as ‘intimidatory’ and ‘knee-jerk’ the latest tactics by lawyers to muffle consumer voices.1

While the extension of online comparison and review websites may be novel to legal services providers both abroad and here in Australia, for other Australian businesses they are becoming an increasingly familiar part of the online landscape. Below, we consider the options available to businesses to deal with poor online reviews given the protections provided to both consumer-reviewers and the websites on which their reviews are hosted.

Issues with threatening a defamation action against the consumer/reviewer

As flagged by the Legal Services Consumer Panel in the context of lawyers in England and Wales, defamation proceedings are often empty and simply designed to alarm reviewers enough to remove their reviews – even genuine ones. One problem with making such threats is the reputational damage that might occur through being perceived as overly eager to muzzle reviewers. Comparison websites are able to demonstrate to consumers in various ways which companies are more likely to threaten legal proceedings; for instance by indicating where and why feedback has been withdrawn. Continual first-resort to (the threat of) defamation proceedings by reviewed businesses may also increase the likelihood of regulatory guidelines concerning responses to consumer reviews being put in place – as has been suggested in the UK.2

Although those possible consequences ought to be considered, given the right facts defamation proceedings may well be an appropriate option. Online reviewers certainly have been found liable in defamation in the UK, including in a recent case where £50,000 was awarded against a UK-based ‘troll’ who reviewed a US lawyer stating that the lawyer was a ‘Scumbag … pays for false reviews, loses 80% of his cases.’3

The UK debate about the propriety of threatening a defamation action in these situations is also informed by the applicable Defamation Act 2013, which requires a person to show that they have suffered or are likely to suffer ‘serious harm’ from a defamatory statement. The threshold is not so high in the Australian context, although there may be various defences available to consumer-reviewers to which thought should be given before raising the possibility of a defamation action. In addition, as discussed below, even non-defamatory reviews may be problematic from the perspective of the Australian Consumer Law (ACL).

Misleading and deceptive conduct? – suing the online review site

If reviews are accurate and/or true reflections of a consumer’s opinions about the reviewed business, it may be unlikely that any defamation has occurred. However, positive reviews may be incentivised by businesses offering rewards to reviewing customers; and predominantly positive or negative reviews may be selectively (and misleadingly) curated and displayed by comparison websites. There is the additional possibility that positive reviews about a business, or negative ones about their competitors, may be fake. In these situations, service providers may consider taking legal action against the online review site itself.

The ACCC has issued guidelines addressing fake, incentivised and misleading reviews, and the possibility that these may operate to mislead and/or deceive consumers in contravention of the ACL (Guidelines).4

Online consumer review platforms, and businesses, are encouraged:

  • To be transparent about commercial relationships, including distinguishing between any ‘promoted’ content from ‘organic’ content.
  • Not to write or engage others to write reviews that do not reflect a genuinely held opinion5; or selectively edit or remove negative reviews. Both will be considered misleading.
  • For online review platforms, to take steps to identify fake reviews. The amount of effort required will depend on the platform’s characteristics.

Incentivised reviews are permitted under the Guidelines, but only if they are offered equally to customers, regardless of whether they are likely to be negative or positive; reviewers are told that the incentive does not depend on the nature of the review; and the incentive is disclosed to those who rely on reviews.

Online review sites may also be able to rely on s 19 of the ACL, which exempts ‘information providers’ from the prohibition on misleading or deceptive conduct. As a precautionary measure, however, review sites should try to respond promptly to aggrieved service providers and explain their Guideline-compliant systems in order to avoid fostering a sense that they favour any particular business. Review platforms should also consider avoiding representing to users in any way that they vouch for the reliability of reviews that they host, or that they warrant to perform certain actions in the event that reviews are shown to be fake or complaints received. Such representations might be relied on by aggrieved businesses, as users of the services, to commence proceedings.

Businesses who wish to complain to or proceed against online review platforms should themselves consider taking steps to ascertain whether any of their employees have created retaliatory ‘reviews’ about themselves or competitors.

With the increasing popularity of online review services and their extension to a wide range of industries and professions, both businesses and review platforms should be aware of the potential pitfalls in this area, particularly given that penalties of up to $1.1 million may apply for being found to have engaged in misleading or deceptive conduct.

1. /blog/2015/blog_entry_guest_february_2015.html; and reported in other media, see:
2. Ibid.
3. Bussey Law Firm PC and Timothy Raymond Bussey v Jason Page [2015] EWHC 563 (QB), discussed here.
4. As discussed in our previous Focus Paper of 13 January 2014.
5. Action has been taken in such circumstances – see ACCC Public Register:

Liability limited by a scheme approved under Professional Standards Legislation.
© ADDISONS. No part of this document may in any form or by any means be reproduced, stored in a retrieval system or transmitted without prior written consent. This document is for general information only and cannot be relied upon as legal advice.

Liability limited by a scheme approved under Professional Standards Legislation.
© ADDISONS. No part of this document may in any form or by any means be reproduced, stored in a retrieval system or transmitted without prior written consent. This document is for general information only and cannot be relied upon as legal advice.