Online reviews: Three lessons for small business

Many Australian consumers are now reading online reviews, with most looking at around five posts before making a purchasing decision. This is a great thing for both consumer choice and encouraging competition.

Unfortunately, there are also a few businesses who play fast and loose with what seem to be honest reviews. Recent actions by the Australian Competition and Consumer Commission provide some valuable lessons.

1. Don’t offer incentives for unbalanced positive online reviews

It is okay to offer incentives in exchange for reviews but you should offer them equally to both complimentary and critical customers. You should also tell customers that the incentive is available regardless of whether they write something positive or negative. To avoid misleading readers, you should also encourage customers to disclose any incentives in their post and, if posts are to be made on a specific review website, you should advise the operator of this site.

True Value Solar offered customers a free solar panel service valued at $199 for posting a review on the Product Review website. The problem is True Value Solar only offered the deal to happy customers who were likely to post a positive review. They also failed to disclose the offer of the incentive to readers of the review. True Value Solar immediately discontinued the incentives program after the ACCC raised concerns.

2. Don’t write fake reviews pretending to be a happy customer

The rules are simple: be honest. Don’t write reviews about yourself as if you are a customer. Don’t write a negative review about a competitor if you have never used their products or services. Don’t pay someone from a public relations firm to deliver reviews purporting to be from genuine consumers.

The franchisor of the Electrodry carpet cleaning business, A Whistle & Co (1979) Pty Ltd, posted false testimonials and asked franchisees to do the same on websites including Google, True Local and Yelp. The Federal Court found this to be deliberate, systematic and covert behaviour and ordered Electrodry to pay total penalties of $215,000. The judge said like other forms of false or misleading advertising, the fabricated testimonials had the potential to mislead a large number of consumers, divert customers from law-abiding competitors and generate a positive perception of Electrodry based on falsehoods.

3. Don’t manipulate reviews to boost your overall star ratings

Star or average ratings are a great time saver. They should give consumers a quick indication about the popularity and overall quality of the business. But remember, it is misleading to post fake reviews to improve your overall score. It is also misleading to make your average appear better by removing or offering incentives for customers to remove unfavorable or low reviews.

Citymove Pty Ltd paid penalties totalling $30,600 after the ACCC issued three infringement notices in 2015. We issued the notices because we had reasonable grounds to believe Citymove was posting fake online reviews in order to boost its overall ratings on Google+. Citymove’s rating featured prominently on Google Search results for removalists within some locations.

For more advice read the ACCC’s guidance about managing online reviews here.