Evolving Regulatory Landscape of Fake Reviews Across the Globe
In many jurisdictions, companies can take legal action to stop third parties from manipulating consumer reviews. In some jurisdictions, they are even mandatorily required to take such measures or to make their efforts against fake reviews transparent.
Germany and other EU countries
In Germany, fake reviews are primarily regulated by the Act against Unfair Competition (“UWG”). Under the provisions of the UWG, companies may not engage in misleading commercial practices. German courts have found that fake reviews are misleading in particular if the reviews were published by persons who:
- Received a remuneration or other pecuniary benefit for doing so but do not disclose this in the review;
- Had not ordered the reviewed product or otherwise gained personal knowledge of the product; or
- Were instructed to publish a negative review or to include a specific star-rating, text, image or video in their review.
With the recent implementation of the EU Omnibus Directive (Directive (EU) 2019/2161) into German law, further provisions have been introduced so as to expressly render the use of false reviews or the misrepresentation of consumer reviews illegal.
Companies who discover that their competitors cause misleading or otherwise illegal reviews to be published can take direct action against these competitors. Depending on the individual case, they have cease-and-desist claims, claims for damages and claims for information on the published reviews against their competitors. But they better act quick - the time frame for legal action on cease-and-desist claims is fairly short. In addition, it is often beneficial to take immediate action and apply for a preliminary injunction against the competitor instead of filing a lawsuit that may be pending for years.
German law does not only provide companies with a toolbox to fight fake reviews, however. Following the implementation of the EU Omnibus Directive, the UWG also puts the onus on companies who host consumer reviews. These companies can be found to engage in unfair commercial practices themselves if they do not provide information on whether and how they ensure that the published reviews come from consumers who have actually used or purchased the goods or services. These new requirements only entered into force on 28 May 2022, and companies should be mindful to observe them to avoid having to face cease-and-desist claims and related claims from their competitors and consumer protection agencies.
As the Omnibus Directive has been implemented across the EU member states, the legal situation is similar in these markets and there are options to proceed against businesses manipulating reviews in most EU countries.
UK
Fake reviews litigation is somewhat of a novel concept in the UK. This is because, currently, there is no specific law in the UK that prohibits the publication of online fake reviews.
While there is The Consumer Protection from Unfair Trading Regulations 2008 (“CPUTR”) (which prohibits misleading practices by business owners), “fake reviews” aren’t expressly called out as a misleading practice. Actions under the CPUTR can also only be brought by market authorities who, to date, have not had tackling fake reviews high up on their agenda. This, coupled with a lack of a direct contractual relationship means outlining a cause of action is generally difficult for companies wanting to take action against those entities procuring fake reviews. Despite this, Hogan Lovells London has recently successfully helped clients secure permanent injunctions against entities operating fake review brokering businesses.
However, the fake reviews landscape in the UK is set to change. In April this year, for the first time, the UK Government has outlined proposals to:
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Add to the current list of automatically unfair practices in the CPUTR to include:
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Commissioning and incentivising fake reviews;
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Hosting consumers reviews without taking reasonable and proportionate steps to check they are genuine; and
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Offering or advertising to submit, commission or facilitate fake reviews.
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Provide enhanced legislative powers to the Competition and Markets Authority (“CMA”) (the UK's primary “consumer protection from unfair practices” authority) to enforce consumer protection law directly. This means the CMA would be able to:
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Decide itself whether consumer law has been broken (as opposed to having to go via the courts);
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Direct compliance and impose turnover-based or fixed penalties (in certain instances, this could be up to 10% of a business’s global annual turnover);
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Award redress to consumers; and
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Continue to be able to use its enforcement powers via the civil courts (with the government also intending to provide additional fining powers to the civil courts) and the criminal courts.
The UK Government’s landmark legislation to regulate illegal and harmful online content, the Online Safety Bill, also addresses fake reviews. The Bill has now been introduced to Parliament and is at the Committee Stage. Once in force, it will require online services (including search engines and hosting platforms) to use proportionate systems and processes to take action against illegal and harmful online content. In relation to priority illegal content, which includes fraud offences such as fraud by false representation, services may have to take additional steps to prevent individuals from encountering such content. Where fake reviews are intentionally posted by a person to make a gain for themselves or a loss to someone else, they could constitute priority illegal content and services may be under a duty to remove them. Ofcom (the UK regulator of online safety) will set out further details on what platforms will need to do to fulfil their duties in codes of practice and has the power to mandate the use of AI to monitor the service, identify fake reviews, and remove them. Ofcom will also have a range of sanctions available to it, including the power to block services in the UK and issue substantial fines of up to £18 million or 10% of annual turnover.
The key takeaway? Keep a very close eye on developing regulatory regimes that are poised to fundamentally change the obligations under UK law to ensure consumers are protected from fake reviews.
Australia
Fake or misleading online reviews have been a growing problem for businesses operating in Australia.
In Australia, the use of fake reviews and testimonials on online platforms is generally considered a contravention of the misleading and deceptive conduct provisions of the Australian Consumer Law (“ACL”). For example, a person must not, among other things, make:
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False or misleading representations that goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits.
The ACL is enforced by the Australian Competition and Consumer Commission (“ACCC”). The ACCC have indicated that conduct may be misleading or deceptive when managing online review platforms if, among other things:
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Reviews are represented as being impartial, but are actually written by the reviewed business or a person being paid to write the review (and who has not used the product or service);
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Incentives are provided to write positive reviews;
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There has been a failure to disclose commercial relationships between businesses and review platforms; and/or
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Reviews are edited or selectively omitted (particularly negative reviews).
Such conduct has been subject to regulator enforcement action. For example, in 2020:
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A health services booking and review platform was ordered to pay A$2.9 million in penalties for misleading conduct that included, among other things, failing to publish approximately 17,000 negative reviews and editing approximately 3,000 reviews to remove negative aspects of the reviews.
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An online tasking platform was also ordered to pay A$600,000 in penalties for drafting reviews on behalf of consumers for comment and if a customer did not respond within 3 days, the review was automatically published without customer input.
Where a business becomes aware of fake or misleading online reviews being published on its platforms (for example by a competitor or a person who has not used the product or service), the first step the business should take is to respond to the review in a comprehensive and public manner. It is important businesses remain professional in how it handles fake or misleading online reviews on its platforms. In more serious instances, cease and desist action can be taken. In some instances, fake reviews can also amount to defamation – in fact, there have been multiple successful defamation actions regarding false negative reviews in recent years.
Conclusion
The value to consumers of online reviews as powerful forums for user feedback is clear. However, regulators and legislators are also exploring efforts to guard against the potential for abuse and make it easier to stamp out false and misleading reviews. In many jurisdictions, legislation is developing quickly in this space and regulatory intervention is stepping up. Hogan Lovells has a team of experts in its cross-border Online Services Working Group who are staying on top of the developments and ready to help.
Authored by Valerie Kenyon, Mandi Jacobson, Dr. Sophie-Isabelle Horst, Telha Arshad, and Vicki Kooner.
