Published on Jan 11, 2016

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The Federal Court has fined a carpet cleaning franchisor $215,000 after an Australian Competition and Consumer Commission (ACCC) investigation into fake online testimonials.

The Court found Electrodry posted fabricated reviews on Google, True Local and Yelp for services never provided to customers which did not exist.

It was also shown the franchisor asked its franchisees to post similar content in what Justice Yates referred to in his judgement as misleading and deceptive, with the potential “to mislead a large number of consumers, divert customers from law-abiding competitors, and generate a positive perception of Electrodry that was based on falsehoods.”

Justice Yates also noted a significantly greater penalty would have been imposed if not for Electrodry’s cooperation during proceedings.

ACCC Deputy Chair Dr Michael Schaper said consumer issues in the online arena remain an area of ACCC concern.

“While online testimonials can be a useful and genuine marketing tool, it is important that online businesses understand that making or inducing false or misleading representations about testimonials breaches the Australian Consumer Law,” ACCC Deputy Chair Dr Michael Schaper said.

“By manipulating or producing false reviews or testimonials, businesses mislead consumers who rely upon them when making purchasing decisions.”

Don’t get caught out

While it might be tempting for businesses to boost their ratings with a bit of creative marketing, the ACCC guidelines for reviews and testimonials are very clear:

Regardless of the advertising medium, any review or testimonial should reflect the genuine views and opinions of the person that is represented to have made it. Businesses must not misrepresent consumer opinions to dishonestly promote themselves. A fake review or testimonial is one which does not reflect the genuinely held opinion of the author. Using false or misleading reviews or testimonials in any advertising medium will risk contravening the Australian Consumer Law.

Read the ACCC Advertising and selling guide for more information about ensuring advertising complies with Australian Consumer Laws.

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