Australian Competition and Consumer Commission v A Whistle (1979) Pty Ltd

The Australian Competition and Consumer Commission (ACCC) has reinforced its stance against the publication of false testimonies and reviews online instituting proceedings against A Whistle (1979) Pty Ltd  trading as Electrodry Carpet Cleaning (Electrodry). Electrody is a franchise business that offers carpet and upholstery cleaning services.  The ACCC alleges Electrodry engaged a contractor to publish fictitious reviews online constituting misleading and deceptive conduct.  The fake reviews appeared on a number of popular internet review websites such as True Local, Word of Mouth and Google.   As a franchisor Electrodry is said also to have encouraged franchisees to publish false testimonials online.

In 2013, the ACCC released guidelines include a broad set of ‘principles’ that are aimed at reducing the number of misleading, solicited and fictitious reviews online. The publication of false or misleading information may also be in violation of the Competition and Consumer Act 2010 (Cth) (CCA).

According to section 18 of Schedule 2 of the CCA: “a person must not, in trade or commerce, engage in conduct that is misleading and deceptive or is likely to mislead or deceive” The ACCC is seeking a declaration that Electrodry breached the CCA, as well as penalties, injunctions and the publication of corrective notices. There are steps businesses can take to avoid breaching the CCA and ACCC guidelines:

  1. Where a business has an arrangement or commercial relationship with a reviewed business it is important to clearly inform consumers of the extent of that relationship and how it influences the review;
  2. While incentives may be offered to users to submit reviews, these incentives must apply equally to positive and negative reviews. Businesses should specify at the point of submission that the incentive is not response dependent;
  3. Reviews should be displayed in a way that does not distort their value.   For example, if a product or service is rated then the total number of reviews submitted should be clearly displayed.
  4. Businesses should not submit reviews concerning themselves or encourage family or friends to do the same.

Links and further references

Legislation

Competition and Consumer Act 2010 (Cth)

Competition and Consumer Legislation Amendment Act 2011 (Cth) Schedule 2

ACCC Advertising your business – Social Media

ACCC Guide for business and review platforms

Cases

Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Limited [2014] FCA 634 

Undertaking of Citymove Pty Ltd

Other Links

ACCC Guidelines to online reviews

ACCC country of origin labelling

When is your licensee really a franchisee?

Further information

If you need further information please contact us for an obligation free and confidential discussion.

Malcolm-Burrows-Lawyer

 

 

 

 

 

Malcolm Burrows B.Bus.,MBA.,LL.B.,LL.M.,MQLS.

Legal Practice Director

Telephone: (07) 3221 0013

Mobile: 0419 726 535

e: mburrows@dundaslawyers.com.au


 

Disclaimer

This article contains general commentary only.  You should not rely on the commentary as legal advice.  Specific legal advice should be obtained to ascertain how the law applies to your particular circumstances.

 

Dundas Lawyers
Street Address Suite 12, Level 9, 320 Adelaide Street Brisbane QLD 4001

Tel: 07 3221 0013

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