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Social media has become an integral part of the way society interacts.  Businesses rely on social media to promote their goods and/or services, and to expand their customer bases, whilst aggrieved customers turn to it to express their grievances concerning their experiences with a business.

There have been a number of cases where businesses have been found to engage in conduct (concerning the management of negative online reviews) that contravened the Australian Consumer Law.

On 31 July 2018, the Federal Court of Australia handed down orders in the case of Australian Competition and Consumer Commission v Meriton Property Services Pty Ltd (No 2) [2018] FCA 1125, including a declaration that Meriton Property Services Pty Ltd (“Meriton”) had engaged in conduct that contravened the Australian Consumer Law, and an order that Meriton to pay the sum of $3,000,000 by way of pecuniary penalty in relation to one of the contraventions.  This decision followed that in Australian Competition and Consumer Commission v Meriton Property Services Pty Ltd [2017] FCA 1305 (which is discussed below).

In light of those decisions, this article seeks to provide guidance to business operators (“Operators”) when dealing with a negative review or complaint on their business’s website or social media pages.

Use of social media platforms by customers

It appears that writing a scathing review on the applicable business’s Facebook page has become a customer’s preferred method to escalate a complaint and obtain a satisfactory outcome.  Many businesses have large followings on social media, and a potential threat to the business’s reputation from a negative online review will spur the Operator into taking action.

Operators generally monitor their website and social media pages regularly, as it is in their interest to address negative reviews or complaints promptly.

Given the wide reach of a negative comment or complaint on a business’s website or social media page, an Operator may be tempted to delete or hide the comment / complaint.  However, the consequence of doing so may expose the Operator to a greater loss than that it may otherwise suffer in connection with the review or complaint.

The Meriton case

The facts

Meriton carried on business offering serviced apartment accommodation, and was subscribed to a TripAdvisor service called “Review Express”.  The service allowed Meriton to pass on the email addresses of its customers to TripAdvisor, who would subsequently prompt the customers to submit a review of their recent experience.  However, rather than sending TripAdvisor the email addresses of all guests who had stayed at its properties, Meriton would either:

  1. add the letters “MSA” to the front of the email addresses of those guests who had made a complaint or were considered likely to make a complaint. The purpose of this practice was to render the email invalid; or
  2. withhold from TripAdvisor the email addresses of all the guests who had stayed at a property during a period of time when there had been a major service disruption such as issues with the lifts or the hot water service,

(together “Conduct”).

The Proceeding

The Australian Competition and Consumer Commission (“ACCC”) commenced proceedings against Meriton alleging that the Conduct contravened sections 18 and 34 of the Australian Consumer Law.

Section 18 prohibits a person from engaging, in trade or commerce, in conduct that is misleading or deceptive or is likely to mislead or deceive.  Section 34 provides that a person must not, in trade or commerce, engage in conduct that is liable to mislead the public as to the nature, the characteristics, the suitability for their purpose or the quantity of any services.

The decision

The Court found that the Conduct had the effect of:

  1. reducing the number of negative reviews posted about major service disruptions at Meriton’s properties, which in turn reduced the consumers’ awareness of the prevalence of service disruptions at the Meriton properties, and created an impression that was incomplete and inaccurate; and
  2. reducing the number of negative reviews left by consumers describing complaints in relation to the Meriton properties, and improving the number of favourable to unfavourable reviews about each property. This was found to create a favourable impression about the quality or amenity of the Meriton properties on the TripAdvisor website.

In view of those findings, the Court held that the Conduct was in contravention of sections 18 and 34 of the Australian Consumer Law.

Application of Meriton case to websites or social media

Whilst the Meriton decision specifically deals with the management of customer reviews on review platforms such as TripAdvisor, it nonetheless serves as a warning to Operators dealing with a negative review or complaint on their business’ websites or social media pages.

The ACCC has cautioned businesses about selectively removing or editing reviews (in particular negative reviews) from their website, social media or review platforms.

If an Operator:

  1. deletes or hides negative comments / complaints from the business’s website or social media;
  2. with the effect that the remaining comments on the business’s website or social media (as the case may be) create an impression about the business that is not consistent the opinion of its customers,

the Operator may be misleading its customers in contravention of the Australian Consumer Law.

Practical tips

Where a negative comment / complaint has been posted on the website or social media page of a business, the better approach would be for the Operator to promptly acknowledge the comment / complaint, and respond to it.  This step allows the Operator to explain its position, and to address the matters set out in the comment / complaint.  It also shows other customers of the business that the matter is being handled.

It will not be misleading for the Operator to delete a comment / complaint that is fake, offensive, defamatory or irrelevant.  To ensure that customers understand the circumstances in which their comments may be deleted, the Operator should develop a content moderation policy and make such document accessible to the business’s customers.  Provided that the content moderation policy is reasonable, and the Operator complies with the policy when removing a comment / complaint from the business’s website or social media pages, it will be difficult for customers to argue that the Operator is engaging in conduct that contravenes the Australian Consumer Law.

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