Online platform operators
These are businesses such as Airbnb and Uber which bring suppliers and consumers together to create a virtual marketplace. They usually facilitate payment and operate a peer review system. The ACCC has emphasised that while the sharing economy benefits consumers, platform operators wield significant power and must be careful to comply with the Australian Consumer Law (ACL).
Platform operators should ensure that they are transparent and prominently disclose their fees, policies and terms and conditions. Fine print will not necessarily be enough to offset the overall misleading nature of a webpage.
Platform operators should actively manage their peer review system to ensure that consumers are not misled, including by:
- not removing or editing reviews unless they are fake or offensive;
- not offering incentives for positive reviews;
- disclosing where they are aware of traders offering incentives for positive reviews;
- ordering or ranking reviews by the date they were published;
- putting in place identity verification systems to combat fake reviews (which do not reflect the genuinely held opinion of the author) and phoenixing (where traders with bad reviews close one account and open a new one); and
- only publishing bilateral reviews simultaneously in order to prevent the receiver of a negative review posting a deliberately false review in retribution.
Even though platform operators do not write the reviews themselves, a poorly managed review system can contravene the ACL where the operator has made representations about the safety or trustworthiness of their platform.
Traders using online platforms
People who drive for Uber or rent out their house on Airbnb may be subject to the ACL even though they don’t operate a traditional business. As a general rule, the more regularly you sell goods or services to the public through the platform, the more likely it will be conduct “in trade or commerce” and the ACL will apply.
Traders should be careful to:
- not make misleading statements when they advertise their goods or services. As mentioned above, fine print will not necessarily be enough to offset an overall misleading impression;
- not post, or encourage others to post, fake reviews about themselves or their competitors. Incentives can be offered to write reviews so long as they are disclosed and do not require a review to be positive;
- ensure their goods are free from defects, match their description, work as intended and are safe;
- ensure their services are provided with due care and skill and are fit for purpose; and
- offer to repair, replace or refund defective goods.
The ACCC has made it clear that false online testimonials is a priority area for enforcement. Traders who post or encourage others to post fake online reviews can be fined up to $1.1m per review for corporations and $220,000 per review for individuals.
For example, in ACCC v Whistle & Co,the Federal Court ordered a franchisor to pay $215,000 in penalties for publishing and inducing its franchisees to publish fake online testimonials.
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