Regulators will punish companies posting fake or incentivised reviews on their websites. UK Competition and Markets Authority (CMA) publishes an open letter to marketing departments, agencies and their business clients.
With consumers deciding where to travel or have treatment, increasingly relying on consumer reviews, some companies post fake reviews, take down negative ones and reward customers posting positive reviews.
This is misleading and verging on fraudulent. So UK regulator the Competition and Markets Authority (CMA) has published an open letter to marketing departments, agencies and their business clients reminding them of the need to ensure that online reviews and endorsements are being used in line with consumer protection law.
CMA investigated practices after its report uncovered that online reviews and endorsements play a significant role in informing consumer-buying habits with an estimated £23 billion pounds of UK consumer spending potentially being influenced. The report highlighted serious misgivings about the industry and in particular the following practices which are a breach of consumer protection law:
- Businesses creating fake positive online reviews about themselves or fake negative online reviews about their competitors
- Businesses commissioning third parties to write fake online reviews
- Businesses incentivising consumers to write positive reviews
- Businesses paying to use editorial content to promote products/services without making clear that the content is sponsored
- Businesses editing or deleting negative reviews
- Businesses pretending to be customers commenting on negative reviews on third party websites.
Following investigation, the CMA secured undertakings from two marketing companies, Starcom Mediavest and TAN Media, who were found to have organised undisclosed endorsements in online articles and blogs on behalf of businesses. The companies have signed undertakings to confirm that they will ensure all future advertising and other marketing in articles and blogs that it administers is clearly labelled or identified so that it is distinguishable from the opinion of a journalist or blogger.
The CMA has warned 13 other marketing companies, 20 businesses and 33 publishers about the need to ensure that paid for content is clearly distinguishable from editorially controlled opinion pieces.
CMA has received assurances from five online review websites after they agreed to improve their practices. It also took enforcement action against a marketing firm that had been found to have published over 800 fake positive online reviews for 86 small businesses published across 26 different consumer review websites.
Under consumer protection law it is an offence to write or commission any kind of fake review or to not make clear if an endorsement is sponsored (paid for).
Businesses that flout the rules could find themselves not only being investigated by the Advertising Standards Authority under its CAP Code and being named and shamed in a published upheld ruling, but also being investigated by the CMA, which has new powers to rein in those operating unfair business activities.
The CMA prefers to advise and warn, but some companies have a reputation of thinking that they are big enough to flout the law, treating fines as a business expense. Serial offenders risk being found in clear breach of consumer protection law, with the potential to incur significant penalties, including an unlimited fine and/or imprisonment.
What must businesses do in order to comply?
- Ensure any paid for endorsements are clearly labelled as being paid promotions
- Not write or commission fake online reviews
- Not offer incentives to consumers to write positive reviews
- Provide clear instructions to marketers and agencies to ensure transparency