A representative of the Australian Competition and Consumer Commission (ACCC) recently noted that consumers engage with online reviews to make decisions on whether to purchase a product or use a service (‘Wisdom to remove unfair contract terms’, ACCC Media Release 104/18, (located at: https://www.accc.gov.au/media-release/wisdom-to-remove-unfair-contract-terms)).

Two recent ACCC actions indicate that attempts by businesses to control online reviews may not go unnoticed.

Attempting to Control the Opportunity to Provide Online Reviews

In ACCC v Meriton Property Services Pty Ltd, Meriton Property Pty Ltd (Meriton) was held by the Federal Court of Australia to have engaged in misleading conduct and misleading conduct in relation to the nature or suitability for purpose of services due to the practices undertaken by Meriton in relation to TripAdvisor online reviews through its use of TripAdvisor’s Review Express.

The Review Express service enabled Meriton to send the email address of guests who stayed at Meriton properties to TripAdvisor. TripAdvisor would then send invitations to the Meriton’s guests to complete a TripAdvisor review. The conduct Meriton engaged in to inhibit the completion of negative online reviews were as follows:

  • the withholding of guest emails from TripAdvisor if there was a major disruption at a property; and
  • putting the letters ‘msa’ in the email address of guests who made a complaint or were considered to be unlikely to give a positive review so that the email sent by TripAdvisor to that guest would not be delivered.

This conduct prevented guests likely to provide a negative review from making that review. The Court considered that the practices engaged in by Meriton had the result of generating the impression that the quality of Meriton properties was more complimentary and positive than it would otherwise have been had conduct not been engaged in.

The Court also noted that the wording of the Australian Consumer Law sections relevant to this case were drafted “in simple language capable of potential application to new circumstances that arise through developments in technology”. Which is an important indicator from the Court that compliance with these, and other, Australian Consumer Law sections, is essential regardless of new technology being available.

Preventing Negative Online Reviews by Contract

The standard home building agreement of Wisdom properties Group Pty Ltd (Wisdom) imposed non-disparagement obligations on its customers to restrict and preclude negative public statements, including online reviews. The ACCC considers that a standard form contracts attempting to ‘prevent or limit a customer form making public comments about goods or services are likely to be unfair under the Australian Consumer Law’.

Additionally, if customers made disparaging public statements the contract also allowed Wisdom to defer the building of a customer’s home and to hold that customer liable for loss connected with the public statement.

Wisdom has agreed not to enforce these clauses and has accepted court enforceable undertakings, including ‘publishing a corrective notice on its website, contacting affected customers, and establishing an Australian Consumer Law compliance program.’.

Each of these examples demonstrate that using methods to prevent negative online reviews is likely to contravene Australian Consumer Law.