Many business owners know first-hand the power of positive customer testimonials and reviews. Perhaps, none more so than Perth-based Aveling Homes, which took the extraordinary step of creating two separate websites for the purpose of displaying positive customer reviews.

However, Aveling Homes recently learned that it is not a free-for-all when it comes to using testimonials and reviews to quickly gain the trust of prospective customers. In fact, the Australian Competition and Consumer Commission (ACCC) has instigated legal proceedings against Aveling Homes, alleging that it created the websites in such a way that they appeared to be:

• independent of its own business
• affiliated with Product Review, which is an independent third-party consumer review website, when this was not the case.

The ACCC also alleged that Aveling Homes deliberately managed the websites to ensure a favourable overall impression by obscuring or removing unfavourable reviews.  

The ACCC is responsible for ensuring that businesses comply with the Australian Consumer Law (ACL), as well as taking enforcement action. It requires customer reviews and testimonialsto be genuine, accurate and presented in a balanced way.

The law

The ACL promotes competition and fair trading and provides for consumer protection. Section 18 of the ACL prohibits a person (or business) from engaging in conduct that is capable of misleading or deceiving consumers. Importantly, the conduct in question only needs to have the potential to mislead or deceive. It is not necessary for a person to have actually have been misled or deceived.

The improper use and display of customer reviews and testimonials as part of a marketing strategy clearly falls within the scope of the ACL.  

Guidance provided by the ACCC

The ACCC has previously taken action against businesses for posting fake and misleading customer testimonials and reviews and has indicated its intention to continue to do so. The ACCC has published a guide for online reviews that sets out three core principles to help businesses comply with the ACL.

• Be transparent about commercial relationships.
• Don’t publish or post misleading reviews.
• Omitting or editing negative reviews may be misleading.

There is a range of penalties that may be imposed for breaches of the ACL. In the case of Aveling Homes, the ACCC is seeking declarations, pecuniary penalties, injunctions, corrective notices, a compliance programme, and a finding of fact and costs.  No doubt, the reality of these penalties is a timely reminder for businesses to check their marketing practices, particularly when it comes to customer reviews and testimonials.

Walk the talk 

Many people rely on reviews and testimonials to make online purchases. Therefore, it’s crucial for businesses to ensure that all reviews and testimonials relating to their business are accurate and not misleading in any way. This includes the requirement for a balanced overall impression of a business, product or service to be given, and not one that is calculated to skew purchasers in an unfair and favourable way.     

Are you walking the talk when it comes to using customer reviews and testimonials as part of your marketing strategy?