Regulator to investigate fake online reviews
The Competition and Markets Authority (CMA) is to investigate whether companies are posting fake reviews on websites or paying for endorsements online without that relationship being made clear to consumers.
In February 2015 the CMA asked for businesses to submit evidence for its enquiry into online reviews. It now says that evidence has helped it unearth instances of potentially misleading practices.
In response, the competition regulator has opened an investigation into "a number of companies in connection with the potential non-disclosure of paid endorsements" – but it cannot at this stage reveal which firms are under investigation.
The rise of review websites such as TripAdvisor (which rates hotels and restaurants), Checkatrade (which rates tradespeople such as plumbers and builders) and even the likes of Amazon.co.uk, where people review the products for sale, has been phenomenal.
It has led to a wealth of information being available to consumers, but has also led to high-profile spats between companies and consumers, as well as accusations of bribery – with hotels accused of offering free rooms in return for positive reviews.
In November 2014, for example, it was reported that a hotel in Blackpool had charged a couple £100 extra after they left a poor review on TripAdvisor, while a hostel owner in Glasgow called one guest a "retard" after she also left a negative TripAdvisor review.
Many businesses have also claimed online reviews are unfair. Two high-profile chefs in Ireland have thrown "Certificates of Excellence" issued by TripAdvisor in the bin, because they claim anonymous reviews on the site cannot be trusted.
The CMA acknowledged that "most buyers who used reviews and endorsements found that the product or service they bought matched up to their expectations". But it has said it will use its consumer enforcement powers to investigate breaches of the regulations.
The Consumer Protection from Unfair Trading Regulations 2008 prohibit unfair commercial practices, in particular misleading and aggressive practices. The regulations also state that companies cannot falsely represent themselves as a consumer, nor should they pay for endorsements without that relationship being made clear to consumers.
Nisha Arora, CMA senior director, consumer, said: "Millions of people look at online reviews and endorsements before making decisions such as where to stay on holiday, or which plumber to use.
"We have found that consumers who use online reviews and endorsements find them valuable, but we have also heard about some practices that may be unlawful.
"We are committed to ensuring that consumers' trust in these important information tools is maintained, and will take enforcement action where necessary to tackle unlawful practices. We have opened an investigation into businesses that may be paying for endorsements in blogs and other online articles where the payment may not have been made clear to readers. We have also published information for businesses to tell them what they need to do to help them stay within the law."